The Project Gutenberg eBook, A History of Banks for Savings in Great Britain and Ireland, by William Lewins

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HISTORY OF SAVINGS BANKS.

A HISTORY

OF

BANKS FOR SAVINGS

In Great Britain and Ireland,

INCLUDING

A FULL ACCOUNT OF THE ORIGIN AND PROGRESS OF
MR. GLADSTONE'S FINANCIAL MEASURES FOR POST OFFICE BANKS,
GOVERNMENT ANNUITIES, AND GOVERNMENT
LIFE INSURANCE.

BY

WILLIAM LEWINS,

AUTHOR OF “HER MAJESTY'S MAILS.”

LONDON:
SAMPSON LOW, SON, AND MARSTON,
MILTON HOUSE, LUDGATE HILL, E.C.

[All Rights reserved]

LONDON:
PRINTED BY R. CLAY, SON, AND TAYLOR,
BREAD STREET HILL.

TO

THE RIGHT HONOURABLE

WILLIAM EWART GLADSTONE, M.P.

CHANCELLOR OF THE EXCHEQUER,

&c. &c. &c.

THE GREATEST LIVING AUTHORITY ON ALL MATTERS OF FINANCE,
WHOSE NAME IS NOW INTIMATELY AND DESERVEDLY
CONNECTED WITH ALL THAT RELATES TO
THE SUBJECT OF THESE PAGES,

This Work

IS BY PERMISSION
MOST RESPECTFULLY DEDICATED.

PREFACE.

The present volume is offered as a contribution to the history of a number of provident schemes, which, though quietly working in the country for many years, and affecting to no small extent the social condition of great masses of the people, can scarcely be said to have found an annalist. I think I may fairly consider that the ground covered by this work has not previously been occupied. In saying so much, I do not forget the only book which has hitherto emanated from the British press on Savings Banks. Mr. Scratchley's Practical Treatise on Savings Banks deals, however, with the question technically, and is meant avowedly as a text-book for actuaries and those employed about Savings Banks. The present volume, on the contrary, while it may be supposed to possess some interest even for this limited circle, is not meant to take the place of the above, but seeks its public amongst general readers, and amongst those who, either from inclination in that direction, or through connexion with them as employers, take an interest in the progress of the industrial classes of our country.

Treating as this volume does of useful practical schemes and matter-of-fact topics, I have sought to avoid all matters of speculation, to speak in very plain terms and without waste of words, and, whilst noticing in their proper order all the different proposals having to do with the subject, to refrain from venturing upon any myself. My aim has been to give a full and accurate account of the early history of Savings Banks; and as subsequently to their origin the discussions in Parliament with regard to them and kindred subjects were no incorrect reflex of the feeling in the country at different periods, I have also dealt fully with the parliamentary history of these institutions. In this way Savings Bank reformers, both in and out of Parliament, and their measures of reform—many of them ending in the establishment of different kinds of supplementary banks—are made to pass under review; and the names of those who framed the original schemes, as well as of those who tried to improve upon them, are rescued, for a brief space at any rate, from a state of obscurity, if not of oblivion.

With respect to the latest modification of the Savings Bank principle, as exhibited in the measures brought about within the past few years by Mr. Gladstone, great efforts have been made—as great efforts have been needed—to treat all the questions involved fully and impartially, and to accord these important and far-reaching measures their due place amongst the other wonderful provident schemes of the present century.

Great pains have also been taken to ensure perfect accuracy, both as to facts and figures, and my acknowledgments are due to many gentlemen who are acquainted with the subject in all its bearings, who sent me information, or answered my inquiries, with great readiness and cordiality. It is less necessary to mention any of these gentlemen in this place, inasmuch as reference is frequently made to their assistance at the proper place in the body of this work; but it would be wrong to omit to state that, with regard to Mr. Gladstone's recent measures, I have had every facility granted me by the Post Office authorities for obtaining the necessary and the most recent information respecting these schemes, and that this assistance has been rendered in a manner which calls for my heartiest thanks, as the only sufficient or fitting acknowledgment.

Dealing as I have done with what Mr. Carlyle will allow to be one of the “side sources” of history, I venture to hope that some of the facts now gathered together may not be without their interest to the student of human progress in some of its highest aspects; while to all those who are directly concerned in such schemes, and to masters of workmen, to whom the concluding parts especially are more particularly addressed, this volume is offered, with some confidence that they will find much new and original matter in it, and some old matter put in a new light.

An Appendix is added, giving the Acts, or clear abstracts of Acts, at present in force for all the different descriptions of Banks for Savings, together with some of the latest statistical information which may be thought of value.

W. L.

London, May 24, 1886.

* * * * *

*_** Two questions connected more or less with my subject have been brought into prominence by the action of Parliament since the present work was completed, and to these questions it may not unreasonably be expected that I should in some way refer. The first, or the Savings Bank qualification in the new Reform Bill, concerns Savings Banks and Savings Bank depositors very intimately; the second question, or the proposal of Mr. Gladstone to employ a portion of the money of Savings Banks in reducing the National Debt, can scarcely be said to have an immediate bearing upon either.

With regard to the Savings Bank qualification, I may, perhaps, be permitted to say that, though received with hostility in some quarters and indifference in others, the balance appears to me to be in favour of the proposal. In most respects, if not in all, the qualification may be defended on the same grounds as the Forty Shilling Freeholds; the investment is about the same; the one is open to much the same objections as the other, and there are similar merits in each. Votes may be manufactured under the one equally as under the other, and it is not easy to understand why those who support the one “Bye Franchise” should oppose the other. Little trouble will accrue to Savings Banks under the Act; and the money forming the qualification may oftentimes be allowed to remain in the bank, whereas under other circumstances it might be squandered in unnecessary or unprofitable expenditure. The distinction may be hard on others quite as worthy of the franchise, but who may be in some way unfortunately circumstanced; and it may seem arbitrary to those who have an equal amount invested in some other shape: but these are the sort of arguments which may be brought against Fancy Franchises of any kind with quite as much reason as against this particular one. Working men who may claim the Franchise on the Savings Bank qualification will not be able to keep the fact secret that they are depositors, and that up to a certain amount; and they must submit, on misfortune overtaking them, to be deprived of a privilege which they may have learnt to prize: but, notwithstanding all these and some other minor considerations, I cannot help regarding the Clause as, on the whole, a fair and reasonable acknowledgment of the merits and claims of many of the best portions of the community, who were not influenced by the consideration of this electoral qualification when they originally commenced the practice of provident habits, and also of the claims of others who may not be unduly influenced by the prospect of citizenship which the Clause may henceforth hold out to them.

Mr. Gladstone's recent proposal to convert the 24,000,000l. of Consols, invested by the nation in Savings Banks, into Terminable Annuities concerns the Nation itself much more than Savings Banks. So far, indeed, as the matter affects the trustees of Savings Banks, or depositors in them, it was settled some years ago when the money was made a book debt, and the Government became the banker, as it were, for the sum in question. What the Government now does with the money is no concern of Savings Banks. This is put so plainly by Mr. Gladstone in his Budget speech, and is at the same time so indubitable, that to quote his words is to say all that can be said on this point. “They (the trustees) have nothing to do with the money; that is a mere question of investing it with which we are alone concerned. If we lost every farthing of it, we should have to pay it to them; and if we made a profitable investment of it, it would be entirely our own affair.” In one respect only is Mr. Gladstone's proposal specially satisfactory to Savings Bank officials and all who take an interest in Savings Banks. Under the operations described by the Chancellor of the Exchequer in his Financial Statement, and now familiar to every reader, the Balance estimated to be deficient, of over three millions sterling—a deficiency which has long been a bugbear in all considerations of the subject—will disappear as a separate item in the National Accounts in the process of redemption proposed. The entire scheme shows, especially and prominently, Mr. Gladstone's anxiety to reduce our enormous burden of debt. He here voluntarily proposes to cripple himself in no small degree in the matter of his resources. Should his proposals become law—and it is sincerely to be hoped they will—the process must go on, even when he or his successors may require to raise money at an obvious disadvantage; but if he be satisfied to throw the burden equally on years of prosperity and adversity, surely this is a matter on which the public generally should feel no fear.

CONTENTS.

PAGE

CHAPTER I.

INTRODUCTORY CHAPTER [1]

CHAPTER II.

ON THE ORIGIN OF SAVINGS BANKS [18]

CHAPTER III.

EARLY LEGISLATION OF SAVINGS BANKS—1817 TO 1844 [45]

CHAPTER IV.

ON THE PROGRESS OF SAVINGS BANKS UP TO THE YEAR 1844 [80]

CHAPTER V.

LEGISLATION ON SAVINGS BANKS FROM 1844 TO THE PRESENT TIME [122]

CHAPTER VI.

A CHAPTER ON SAVINGS BANK FRAUDS [183]

CHAPTER VII.

ON THE DEFICIENCIES OF THE EXISTING SYSTEM, AND THE ESTABLISHMENT OF SUPPLEMENTARY SAVINGS BANKS [226]

CHAPTER VIII.

ON PROPOSALS FOR GOVERNMENT SAVINGS BANKS [269]

CHAPTER IX.

ON THE DEVELOPMENT OF THE POST OFFICE SAVINGS BANK SYSTEM [311]

CHAPTER X.

ON GOVERNMENT INSURANCE AND GOVERNMENT LIFE ANNUITIES [345]

CHAPTER XI.

CONCLUDING CHAPTER [377]

APPENDIX [395]

INDEX [437]

HISTORY

OF

SAVINGS BANKS.

CHAPTER I.

INTRODUCTORY CHAPTER.

“Archimedes was wont to say that he would remove the world out of its place, if he had elsewhere to set his foot, and truly I believe so far that otherwise he could not do it. I am sure that so much is evident in the architecture of fortunes, in the raising of which the best art or endeavour is able to do nothing, if it have not where to lay the first stone.”—Sir Henry Wotton.

The habit of laying something by in a prosperous season for the wants of an adverse one is one of the very oldest customs in the world. All our laws, Divine and human, enjoin the exercise of providence and frugality as a social, and as a personal duty. These habits which are inculcated in Scripture as positive duties, and which find ample illustrations in many of the arrangements of nature and Providence, have been common in one form or other to all people in every country and in every age. In England, in almost everything relating to the social advancement of the industrial population, there has been a great and manifest improvement since the commencement of the present century. In nothing is this more true than in the incentives and appliances provided for the growth of provident habits amongst them. An old stocking, a hole in the floor, or a crevice in the wall, was formerly a sufficient bank for such of the poor as cared to save anything; but were that mode of investment unsatisfactory to some few, it was not possible to obtain better. The change which fifty years have wrought in the means for saving and investing small sums of money is remarkable. Not only have these savings assumed in consequence a variety of different forms, but they represent a sum which in the aggregate must be well calculated to astonish anyone who can remember anything of the last century. Before dealing, however, with this as our special subject, a few words may not be spent in vain in endeavouring to trace the gradual advancement made among the poorer classes, the causes that have led to the improvement in their condition, and the means by which the difficulties in their position have been encountered. After this it will not be inappropriate to refer to what still remains to be done.

“The nineteenth century,” as Mr. Gladstone, in addressing the working men of Glasgow, has just said, “whatever else it is, is undoubtedly in a new and peculiar sense the century of the working man.” “It is the century which has seen his position raised, his circumstances improved, new means organised for his benefit, new prospects opened for the future, and he has before him—I mean not the individual but the class—a prospect which, I trust, nothing can mar—of increased weight, increased consideration, increased usefulness, increased happiness in the generations to come.” The Chancellor of the Exchequer might with justice have said that the second quarter of the present century has seen this great improvement inaugurated and carried on. Beginning with 1830, and letting the period of the removal of political and fiscal burdens mark the commencement of the better order of things, the progress of political economy, of social knowledge, and the favouring circumstances of the times achieved the rest. In the first quarter of the century the working population, left pretty much to themselves, or given over to the tender mercies of political demagogues, were either stolidly indifferent to any improvement, or were kept in a constant turmoil of excitement and confusion. The Reform Bill bringing political power to the better class of artisans, gave a decided stimulus to the intelligence of the people, and an impulse to the then existing means of education. This political power brought its responsibilities, and it may be fairly assumed that increased political knowledge was the result. Whether so much will be granted or no, it is certain that schools and educational establishments now began to multiply in a manner unknown to any previous decade. It was now that there came demands for knowledge, and that the demand brought forth supplies of the most practical kind. The story of the popular literary ventures of 1832—the very first of their kind—need not be repeated here, though a volume might well be written on the subject, and showing the influence which they, and other ventures to which they gave rise, have had on the intellectual progress of the people. On the demand for knowledge there followed in quick succession the removal of many barriers that stood in the way; and more important still, the remissions of, to the poor man, enormous fiscal burdens which pressed with great weight upon his energies.[1] It would scarcely be too much to say that every year for the last thirty years the working man has found himself better able to cope with the disadvantages of his position, and, if he should so choose, to place himself to a very great extent beyond the reach of absolute want.

We have alluded to the necessity which began to be felt for the mental improvement of the adult population; still more important were the steps taken from time to time to educate the children who are the old people and the adults of the present day. The present century, among many wonderful changes which it has witnessed, has seen a complete revolution in the means of education for the masses. Many generations since, Milton, with that clear mental vision which was in him like a kind of second sight, foretold that a time would come when the bulk of the people would get a better education “in extent and comprehension far more large, and yet of time far shorter, and of attainment far more certain, than hath yet been in practice;” and although we may not have exactly reached the point prefigured by the poet-seer, some marvellous strides have been taken during the present century. A dramatist of Milton's own period makes a man of substance reply, in answer to the query, “Can you read and write then?” “As most of you gentlemen do, my bond has been taken with my mark at it.”[2] At the beginning of the present century little had been done for the education of the masses. Grammar schools for the children of the middle classes, and Free schools, as they were called, for an infinitesimal fraction of the poor of our towns had been long established, and, so far as they went, with certain enough results; but, if we except the establishment of Sunday schools by Mr. Raikes of Gloucester in 1783, nothing had been done for the educational wants of the general poor. Malthus in his “Essay on Population,” published twenty years after this date, says, “It is surely a great national disgrace that the education of the lower classes should be left merely to a few Sunday schools supported by subscriptions from individuals,” adding at the same time, that the country “lavished immense sums on the poor which we have every reason to think have constantly tended to aggravate their misery.” “In their education,” he goes on to say, “and in the circulation of those important political truths that most nearly concern them, which are perhaps the only means in our power of really raising their condition, and of making them happier men and more peaceable subjects, we have been miserably deficient.” What the state neglected, private enterprise took up; earnest men like Raikes and Pounds, the working shoemaker, not only set an admirable example in their own spheres of labour, but roused to action other men who applied to the work greater powers of mind and the benefits of greater system. Dr. Bell and Mr. Lancaster were two of these, who nearly at the same time expounded their views of a general scheme for educating the people; and who were strengthened in their opinion, as one of them tells us, of its necessity, by the clamour of many who held that the stability of our institutions was only sure so long as the people were kept in ignorance. Mr. Whitbread, a statesman whose name was very prominent about this time for efforts to promote the interests of the bulk of the people, tried to induce Parliament at this stage to take the subject into its consideration, by proposing a plan for the establishment of parochial schools “for the exaltation of the character of the labourer,” and it would have been well if he had met with more success. As it was, the sage legislators of the day, led on by Mr. Windham, considered that such a plan would be very liable to give an education to these classes much above their condition, and Mr. Whitbread's scheme, like many other of his wise proposals to which we shall have subsequently to allude, was set aside. The work, however, had begun and could not be stopped by the attitude of the government. Dr. Bell commenced his system by the establishment of National schools; Mr. Lancaster, supported by Nonconformists principally, set up Lancasterian schools. Although there was for some time much hostility displayed between the rival factions, both organizations struck deep into the dense masses of ignorance in our towns and villages. Then came Government assistance, and gradually that system of Government education and supervision which, in spite of many objections to it, has been an untold blessing to the land.

Within the last thirty years the wise legislation of the Government has had a direct influence on the progress of the people in education, and in their social well-being. No more powerful aid, for example, was given towards the triumph of enlightenment than the passing, in 1839, of the penny postage measure, when thousands of the poorer classes became emulous of each other in learning the rudiments of education, so as to be enabled to possess themselves of the untold advantages of this wonderfully successful scheme. Mr. Laing, the celebrated traveller, after visiting the Continent, declared that the system of penny postage was far more likely to cause the spread of education among the masses than the Prussian system of education, if it came to be adopted in this country. Only second to the repeal of the taxes on correspondence was that of the reduction of the newspaper stamp duty, and, still more recently, the abolition of the paper duty. The relinquishment of these taxes redounds to the honour of those who took part in the agitation for their abolition, and who held that no artificial impediment, such as a paltry consideration of revenue, ought to stand between the people and the free circulation of thought. Lord Brougham said on one occasion that, “if newspapers, instead of being sold for sixpence, could be sold for a penny, there would immediately follow the greatest possible improvement in the tone and temper of the political information of the people.” Lord Campbell once expressed a hope that newspapers would be sold for a halfpenny. Much of this has been realized, and the result has been powerful for good. On this point no one can speak with anything like the authority of Mr. Gladstone. Speaking of the repeal of the paper duty, this eloquent statesman has said within the present year, “I did to the best of my ability fight a hard battle for its repeal. And I find now that not only in its repeal was there involved the liberation of a great branch of trade, but there was involved a seed of social and moral good that has sprung up with rapidity, producing a harvest such as, I confess, I had hardly been sanguine enough to anticipate.”[3] The cheap press now finds its way into the homes of the poorest, keeps them informed of the current public events, and makes them interested and anxious in all that concerns their country and its institutions; and, inasmuch as the press of the present day is, under proper conduct, well qualified to enlarge the minds of those whom it must instruct, it is a “seed of social and moral good” from which a constantly-increasing harvest of good fruit may be obtained.

In view of such facts it cannot be said that, during the last quarter of a century, the industrial classes have been entirely thrown on their own resources for the means of their enjoyment and improvement. Over and above the tendency of the legislation of the past thirty years, the upper classes have felt it their duty, as it is unquestionably their interest, to attend to the wants and requirements of those at the bottom of the social scale. They are the safest when the vast mass of our working population are the happiest. Dr. Chalmers must have felt this when he wrote, “I would like to see a king upon the throne, not like an unsupported may-pole among a level population, but a king surrounded by a noble aristocracy and gradations below them, shelving downwards to the lowest basis of the people.” Society has been very often and very truly likened to a pyramid, at the apex of which is the throne; gradually descending, we have substantial strata of the ruling, the upper, and the middle classes, the rough and strong material at the base not inappropriately said to represent the unpolished millions of our industrial population. How far it may be considered true that the foundations of English society are laid in this great class, and how much of the social superstructure they bear on their broad shoulders, we will not attempt to decide. We will content ourselves with saying that the well or ill-being of every man forming this great social pyramid must have a direct or reflex influence on every other man. Homo sum, humani nihil a me alienum.

Of the hundreds of charitable and benevolent agencies set on foot to improve the condition of the English artisan we can only speak in the aggregate. We have the clearest evidence of our senses, that many of them have not been established in vain. Some of them, indeed, have been born and carried on under serious misapprehensions, fatal to their existence, and so have perished without doing half the good which the expenditure of money and time would have warranted. But this is the exception and not the rule. Under the influence of properly organised and properly conducted societies of this nature, which have been quietly working for years, there is a sensible improvement in public morals among the masses of the people. Within the memory of the present generation lewdness, profanity, and vulgarity polluted the atmosphere of most large workshops, and the effect of all this on the minds of the younger portions of the workers must have been utterly demoralizing. Then their hours of idleness were hours of mischief; in them the old proverb of “an idle brain” being “the devil's workshop” was fully exemplified; bull-baiting, cock-fighting, low drinking, and gambling were their amusements; Sunday nor weekday did their children frequent any school, nor they themselves any place of worship; they made no provision for want, sickness, or death, and in times of enforced idleness they were a terror and reproach to the country, only kept in order by the strong arm of the law. To say that all this is changed would be idle, but that much of it is changed is beyond doubt. Even humble society now quickly lays its ban upon those who would think “to rule the roast” by proficiency in vulgarity and profanity; in our large workshops we are assured that acquirements of this nature get less and less appreciation, nor do their exhibition often escape rebuke. Under better and happier influences, many of the rules and social regulations among large congregations of workmen, such as fines and footings, which have always offered great encouragement to idleness and intemperance, have either been done away with or altered for good;[4] masters not only see it to be their interest to encourage their men where they can in habits of sobriety and prudence, but they are now often enabled to enforce regulations tending to this end which before they were almost powerless to effect.[5]

The good results of such habits to the industrial classes themselves and to all portions of society are neither few nor doubtful. The pursuit of economy and thrift will beget, as a matter of course, self-dependence; and as soon as men become socially independent they also become self-relying and self-supplying. “Few men come to the parish who have ever saved money,” said one large employer of labour before a Committee of the House of Commons on Poor Laws. Another never knew a man who had saved a pound out of his earnings who had in the end become a pauper. But the good work does not stop here. “In proportion as our men save money,” said another large employer, “their morals are improved; then they come to see that they have a stake in the country, and behave better.” Or, as Vegetius, describing the Roman soldier, puts it, “knowing that his property is deposited with the standards in the public chest, he never thinks of desertion, becomes attached to his standards, and in battle fights more bravely for them; according to the nature of man, who has always his heart where his treasure is.” Arrived at this stage of the upward journey, the provident man feels the need of education, and must have it; he must also take a part in exerting an influence among his fellows, and even in the government of the country, and if his reading takes a rigid-turn, higher principles of duty are superadded; he will do his work, whatever it is, in every sense better. “I would rather have,” said another well-known gentleman, to the Committee just referred to, “a hundred men in my employ who save money than two hundred who spend every shilling they get; the sober, saving man is always to be depended upon, and the one lot in the long run will almost do as much work as the other.”

The improvement of which we have been speaking must not blind us, however, to the darker side of the picture. Notwithstanding the improvement which has been made, and the inestimable good which flows from the practice and pursuit of frugality and economy, it is still the exception and not the rule among the bulk of our labouring population. For the hundreds who look to the exigencies of their life, there are thousands who are utterly careless of such considerations, and who, in the coarse enjoyment of the present, bury alike all thought of the past and all expectation of and hope for the future. The stigma of improvidence has long attached, and we fear must yet long attach, itself to the generality of English artisans. But for this stigma there would be no operatives in the world equal to the English operative either in wealth, intelligence, or influence. No one with any experience in the case, and with any care as to accuracy, would venture to say that the English workman, sui generis, is not industrious at his work,[6] but too many can say that he is not provident in his home.[7] The English artisan has been said to be at once the hardest worker and the hardest spender in the world. He works like a horse and spends like an ass. So foolishly, indeed, is much of this hard-earned money spent, or misspent, that it were a charity to withhold it, or if it could be done, to throw it into the sea. The consequences attending this riot of expenditure is as natural and as inevitable as any of the laws of God's government. As one who knows them well, and one who has done much for the intellectual culture of the better portion of the artisan class tells us: “In a time of prosperity they feast; in a time of adversity they clem.” Any depression of trade, be it even of the most transient nature, finds them totally unprepared for it; those who have been accustomed to the best wages invariably suffer the most; for, accustomed to the greatest amount of indulgences, they can do worst without it. It is such classes as these that must be reached by some means. In the improvement brought about in the social habits of the people of late years we have a happy augury of the future.[8]

It is time that we brought these introductory remarks to a close. We have to enter upon the consideration of helps and accessories to the spread of prudential habits among the working classes. We have to direct attention to the history and working of some of those schemes which, since the commencement of the present century, have been started to teach men self-reliance and self-dependence, and how they might best help themselves. Anxious not to over-estimate the importance of the subject, we still think it not too much to say that on our industrial classes depends very much the continued and onward progress of the world. Let them but be thoughtful and sober, and these classes, which are the direct agents in our wondrous and manifold British industry, will, not only under circumstances of huge toil and no inconsiderable danger, continue to provide all classes with the necessaries or comforts of life, but they will yet strike out new paths; they will become, in the future, as they have been in the past, the skilful inventors of new instruments and new modes. No fact is more capable of proof than that almost all the successful inventions that have been given to the world to economize the strength of the human hand have been either the productions of thoughtful and industrious workmen, or of those who have risen from that class. “Deduct all,” says Mr. Helps, “that men of the humbler classes have done for England in the way of inventions only, and see where she would have been but for them.” Nor is this all. The list would be a long one of those who have risen by their own industry and perseverance from the lowest ranks to fill the highest positions in every department of life. “It is notorious,” says Mr. Smiles, “that many of our most successful employers, and some of our largest capitalists, have sprung directly from the working classes, and to use the ordinary phrase, have been 'the architects of their own fortunes;' whilst many more have risen from a rank scarcely a degree above them. It was the prudent thrift and careful accumulations of working-men that laid the foundations of the vast capital of the middle class; and it is this capital, combined with the skilled and energetic industry of all ranks, which renders England, in the quantity and quality of her work, superior to any other nation in the world.”[9] And what the humbler classes have done for England in past times they may do, and indeed must do in the future, if we would keep our country in the proud position she now occupies in the world. It requires no prophetic vision to foresee that labour must yet undergo many transformations; and it is of paramount importance that the labourers themselves be not only intelligent but sober and frugal, in order that they may always compete on at least equal terms with the skilled workmen of any other nation.

It is far more difficult to point out what course of action will tend most successfully to secure the fair results of sobriety and frugality than it is to show how necessary it is that these virtues should be cultivated. “The difficulty of doing good,” as one writer expresses it, “is at least equal to its luxury.” The task we have undertaken is far from easy, and beset with perils, but we will endeavour to avoid all occasion of dispute. The pointing out of safe and profitable investments for the hard-earned savings of the frugal and industrious need not and should not be regarded as an invidious task. It seems to us that, as Savings Banks have to do primarily with the foundation of the habit of saving money, and indeed scarcely ever can be considered as competing with any of the numerous schemes for the investing of money, the subject should never be regarded with any jealous feeling. The principle upon which these institutions are founded “interferes,” to use the words of one who has written most ably on such subjects, “with no individual action, saps no individual self-reliance.” “It prolongs childhood by no proffered leading-string; it valitudinarises energy by no hedges or walls of defence, no fetters of well-meant paternal restriction. It encourages virtue and forethought by no artificial excitements, but simply by providing that they shall not be debarred from full fructification, nor defrauded of their natural reward. It does not attempt to foster the infant habit of saving by the unnatural addition of a penny to every penny laid by; it contents itself with endeavouring to secure to the poor and inexperienced that safe investment and that reasonable return for their small economies which is their just and scanty due.”[10] Strengthened by such testimony, we will proceed at once to sketch the history, and, as far as we are able, to show the benefits to be derived from the various kinds of banks for savings established from time to time amongst us.

[1] The following table taken from the Statistical Returns, presented by the Board of Trade, shows in a clear light how much of the position of the working classes must have been improved by the removal of fiscal burdens. Almost all the impositions of taxation between 1850 and 1864 have fallen upon the wealthier classes:—

[2] In 1846, according to the Report of the Registrar General for that year, out of the persons married in that year, one man out of three, and one woman in two, signed the register with marks. What was being done for the children of that year may be gathered from the return for 1864, where it is shown that only eighteen in 100 of those marrying in that year were unable to write their names.

[3] Speech at Newton-le-willows, July 22, 1865.

[4] By way of giving an example of our meaning, we would adduce the case of the workmen employed in the large brass works of Messrs. Guest and Chrimes, Rotherham. When one of their number, for instance, gets married, instead of the accustomed hard-drinking, the men and their wives drink tea together, and a piece of furniture of substantial value is presented to the newly-married pair, paid for out of the subscriptions by the men. On one of these occasions it is related, that the head of the firm was asked to present articles which had been bought for two newly-married couples, and Mr. Guest complied and introduced the business as follows: “The custom you have adopted deserves the warmest commendation and support, and is well worthy of superseding those footings, fines, treats, &c., which, until recently, had become a source of the most cruel, heartless, and unjust robbery to which workmen could possibly be exposed by each other. Thank God that wicked system is fast passing away.”

[5] In 1851-2 a large and well-known engineering firm in Leeds had a serious struggle with their workmen on account of the masters having determined to pay the men according to their merit and the character of the work turned out. A determined strike was the result, which, though the original difference was only with eight men, threw eventually more than 600 out of employment. Fresh hands were obtained with the usual difficulty, and these were subjected to great annoyance and even danger; in eighteen months, however, the works were again all going and were efficiently manned. The masters henceforth made it a condition of employment under them that no member of a trades' union should be engaged, and the sequel was a better behaved and superior class of men. Not only so, but the masters are now enabled to make their own regulations for the benefit of those employed under them, which before, owing to the interference of the trades society, they could not make. They have instituted a sick and funeral fund to which the men contribute by working ten minutes additional time when necessary, an arrangement which we recommend to other large employers of labour and large bodies of workmen. That the masters should be acquitted of any selfish motive, they allow the funds to be managed and applied by a committee of workmen appointed by themselves from their own number.

[6] “No labourer,” says Mr. Smiles in his Workman's Earnings, &c., “is better worthy of his hire than the English one. It is not merely that he works harder than the labourer of any other country, but he generally produces a better quality of workmanship. He possesses a power of throwing himself bodily into his occupation, which has always been a marvel to foreigners;” and he then recurs to the well-known example of the surprise created among the French peasantry when gangs of English navvies proceeded with the works of the Rouen railway, and worked amidst constant exclamations, of “Voilà! voilà ces Anglais! comme ils travaillent!”

[7] We put the matter quite mildly here, though it is customarily and very properly spoken of much more severely. For example, Mr. Norris, one of the Government inspectors of schools, in speaking of the well-paid miners and iron workers of Staffordshire—who doubtless are little worse than the same classes throughout the country—says in one of his able reports: “Improvidence is too tame a word for it—it is recklessness; here young and old, married and single, are uniformly and almost avowedly self-indulgent spendthrifts. One sees this reckless character marring and vitiating the nobler traits of their nature. Their gallantry in the face of danger is akin to foolhardiness; their power of intense labour is seldom exerted except to compensate for time lost in idleness and revelry; their readiness to make ”gatherings“ for their sick and married comrades seems only to obviate the necessity of previous savings,” &c.

[8] Much of what we have said in the foregoing pages is admirably summed up in a sentence or two in an article on “Savings Banks,” which we would not be far wrong in attributing to Dr. Wynter, and which we had not seen before these pages were written: “Contemporaneously with the growth of savings banks, we have seen a growth of civilization among the poorer classes. Thrift has not effected all that amelioration of morals which contrasts so happily the mid years of the century with its younger ones; but it has been no mean confluent to the tide of progress, the softening of manners, the spread of education, the humanising of popular sports and pastimes, the wakening up of the natural dignity and self-reliance of the people,—the broad and indispensable basis of every other virtue.”—London Review.

[9] Quarterly Review, 1859.

[10] Mr. W. R. Greg in the Edinburgh Review, 1853, p. 406.

CHAPTER II.

ON THE ORIGIN OF SAVINGS BANKS.

“It would be difficult, we fear, to convince either the people or their rulers that the spread of Savings Banks is of far more importance, and far more likely to increase the happiness and even the greatness of the nation, than the most brilliant success of its arms, or the most stupendous improvements of its trade or its agriculture. And yet we are persuaded that it is so.”—Edinburgh Review, 1818.

Great Britain can with justice, we think, lay claim to the original establishment of the system of Savings Banks. One well-known writer[11] on this and cognate subjects has traced them to Switzerland, if not to Hamburg, at a time prior to any experiments with them in this country; but from the best investigation we have been able to make, the institutions in question were something very different from Savings Banks as English people understand them, dealing, as they did, in business more like the sale of deferred annuities. The institution at Hamburg, which is said to have been founded in the year 1778,—and which is interesting to readers of history as being one of those whose coffers the First Napoleon swept of their funds, thus giving it its death blow,—simply took the spare cash of domestic servants and handicraftsmen, and granted annuities on the members arriving at a certain age. No withdrawal of money was allowed. In this country the first proposals for a bank for savings were made in 1798 or 1799, according to the judgment of the reader as to which of the two original schemes best deserves the name of Savings Bank, or whether either of them is entitled to the honour. The two persons whose names it is customary to speak of in connexion with the earliest people's banks are those of the well-known Priscilla Wakefield, and the Rev. Joseph Smith of Wendover. In the mind of each of these estimable persons we think the question of becoming the bankers for the poor around them was at first only a subordinate measure, and quite auxiliary to other matters deemed of greater importance. Mrs. Wakefield's scheme arose out of a well-meant anxiety to better the condition of the weaker and more defenceless portions of the community, an object to which she devoted much of her literary ability, and was first started in 1799, for the benefit of women and children in her own village of Tottenham, and under her immediate superintendence. Members paying according to their age certain sums per month became entitled to a pension after sixty years of age; in case of sickness, four shillings a week; in case of extraordinary misfortune a certain amount could be withdrawn; in case of death a sum of money was allowed for the funeral. Honorary members paid subscriptions, which went to meet deficiencies and current expenses. In 1801 there was added, first, a fund from which loans were made to those who had been members for six months; and second, a regular bank for savings. The interest given in the latter case was the same as that charged in the former, or five per cent. The clauses relating to children were such as almost to entitle the founders to the honour of being the originators of Penny Banks, if nothing else; juveniles were encouraged to deposit their penny per month, which was kept for them, along with interest, until such a time as the accumulation was needed for apprentice fee, clothes, or such like object. The management of this Parent Institution, as it may well be called, was equitably divided amongst the honorary and the “benefited” members. In 1804 the Tottenham Bank was more regularly organized, and Mr. Eardley Wilmot, M.P. and Mr. Spurling, were appointed Trustees.[12]

The Wendover institution, which was really started a year before that at Tottenham, partook at first so largely of the nature of a charity as to make it almost of the character of a private undertaking between a rich and benevolent rector and his poor parishioners. Still, there was here the germ of that of which we are in search. Mr. Smith, and two of his richer parishioners, who joined him in the work, circulated proposals in the summer of 1798 to receive any surplus money which any of the working population round them felt they could spare—provided it were not less in amount than twopence; to keep a strict account of every deposit made in this way; and then to repay the money during the winter season, or generally about Christmas, with the addition of one third of the whole, which would be allowed as interest on their deposits—or to speak, perhaps, more correctly, as a bounty for their economy. Any depositor might receive his money before Christmas on demand; and it was further stipulated that, in case of sickness or loss of employment, these fruits of his savings should not preclude him from parish relief, if otherwise he could obtain it. A Christmas dinner was the comfortable addition to the good round sum which, generally, was garnered at this time, the dinner, too, being provided by the three directors. It is rather curious that the time chosen to receive deposits was limited to Sunday evenings; but we suppose this would be justified by the scriptural text, not generally applied in this fashion, which they chose for their motto, “Upon the first day of the week, let every one of you lay by him in store, as God hath prospered him.” For several years these benevolent gentlemen carried on their operations, and had generally about sixty subscribers, who deposited from five to ten pounds every season.

In February, 1807, Mr. Whitbread introduced his Poor Laws Amendment Bill into the House of Commons, and went over the whole ground of the condition and the wants and requirements of the working population in an eloquent manner. That speech—which must have been of several hours' duration—dealt with the past legislation on the subject, and commented on the various steps which ought to be taken, over and above the mere collection of poor-rates, to alleviate the condition of the poor. After dwelling on the subject of national education, and hinting at a mode such as was eventually brought into operation many years afterwards, Mr. Whitbread went on to describe the want felt by the poor of some safe and profitable investment for their earnings; “that so few are found to make any saving may in a great degree be accounted for by the difficulty of putting out the little they can raise at a time.” He described the action of Friendly Societies, and showed that at that early period they were open to the same objections that are now being continually raised against them. “Mr. Malthus,”[13] said Mr. Whitbread, “had just proposed the establishment of county banks, but he would go farther than Mr. Malthus, and extend his principle.” It seemed to him that there would be less trouble in his proposals than in the less extensive proposals of Mr. Malthus.

Mr. Whitbread then went into the matter of his proposals under this head, and we give his own words:[14] “I beg gentlemen not to start at what I am about to suggest, which to many who hear me may be quite new, but to afford it their cool and deliberate consideration. I would propose the establishment of one great national institution, in the nature of a bank, for the use and advantage of the labouring classes alone; that it should be placed in the metropolis, and be under the control and management of proper persons; that every man who shall be certified by one Justice of the Peace to subsist on the wages of his own labour shall be at liberty to remit to the Accountant of the Poor's Fund (as I would designate it) any sum from 20s. upwards, but not exceeding 20l. in any one year, and not more than 200l. in the whole.” He then proceeded to show how the money might be invested in Government Stock, in the name of commissioners to be appointed, and by this means interest would be allowed to depositors at the highest rate possible. “The plan,” added Mr. Whitbread, “will be more amply detailed in the Bill itself, and such regulations are provided as will, with the intervention of the Post-office, give ample facilities to its execution. Gentlemen need not to be told that the perfection attained in the management of that great machine is such as to give the most easy and rapid means of communication with the metropolis, much greater, indeed, than usually subsists between the remote parts of any county and its capital town.” Mr. Whitbread then went on to say, that in addition to this form of investment, the same machinery might be employed to give those who might wish it an opportunity of purchasing annuities by the payment of stated regular sums up to a certain age; and even to insure their lives. So strong, indeed, was this feeling, that he eventually proposed, as an addition to his bill, that under the same management there should be an Insurance-office for the poor, with properly-calculated tables and modes of payment. We need not here dwell upon the miscellaneous items which he fully went into in his admirable speech. He finally begged the patient attention of the House and the country to the consideration of the general outline of the plan which he had proposed, in order to encourage the labourer to acquire property, and to secure to them the certain and profitable possession of it when acquired. He had the greatest hope of a happy effect from its being put in practice. “If the poor,” said he, “should be found to avail themselves of it to any extent, the advantage to them and the country would be incalculable, and the expense attending it would speedily be covered.” This Bill went through several necessary stages; there was little objection manifested to Mr. Whitbread's plans for securing the savings of the poor, but there was also little anxiety to forward the measure. Mr. Whitbread in this, as in many others of his wise proposals, was far ahead of his time, and he suffered the matter to drop towards the end of the session.[15]

One at least of the important organs of public opinion frowned upon Mr. Whitbread, and laughed at his scheme; an organ whose frown and whose laugh was no joke at that date. It has not unfrequently been a subject of remark how persistently the Quarterly Review stood in the way of progress, clogging the wheels of all kinds of reform. In matters of this kind, however, it generally showed a most enlightened policy, and was not unfrequently in the van of improvement instead of obstruction. It was not so always with its more powerful rival, the Edinburgh Review. It commented upon Mr. Whitbread's “strange project” of uniting the savings banks throughout the kingdom in one national establishment, and his minor proposals under that head, and very warmly ridiculed all. “Neither from theory nor from experience,” it concludes an article, “are we able to discover any kind or degree of good as likely to result from so vast a project; though it is easy to see that it might be productive of infinite confusion, trouble, and expense. In fact, every savings bank is perfectly competent in itself to transact the whole of its affairs, and can have no great difficulty to provide the requisite facilities or securities without either disturbing its neighbours, or withdrawing the attention of Government or the Legislature from their proper concerns.”

Before we come to the plans and exertions of Mr., afterwards Dr. Henry Duncan, of Ruthwell, we ought to speak of the original foundation of the savings bank at Bath. The idea of establishing a bank for taking the wages of industrious domestic servants only, and granting them interest for their money, originated with Lady Isabella Douglas in 1808. The managers consisted of four ladies and four gentlemen. No servant could deposit more than 50l., and the entire amount of the funds in the bank could never exceed 2,000l. A servant might deposit up to 50l., withdraw the money and place it in safety, and deposit again in the servants' bank. Interest was allowed at four per cent., and the money could be withdrawn at will. This scheme, so far as it proceeded, was very successful; so much so, that an endeavour was made in 1813 to convert it into a general savings bank, which should know no limit, either in the amount of the deposits or in the class of people from whom the deposits could be taken. For this purpose a committee, “highly respectable for their rank, ability, and benevolence,” met frequently at Bath; but only to find, “after much deliberation,” that these conditions “were utterly impracticable.”[16] In 1815, the Provident Institution of Bath was projected, on very different conditions; and this time, through the exertions of Dr. Haygarth and the Marquis of Lansdowne, who was president, the bank was successfully floated. This bank was essentially the first of its kind in this country, and upon its basis have been formed almost all subsequent banks of any note. The sums deposited were invested in the public Funds, and each man's interest at this early period varied according to the price of the Funds on the day when the investment was made for him.

In November, 1815, the Provident Institution of Southampton was established, principally through the exertions of the Right Hon. George Rose, who was appointed president, and who soon afterwards wrote an account of the undertaking.[17] The exertions of Mr. Rose on behalf of savings banks will frequently require to be spoken of in subsequent pages. The Southampton Bank was an improvement on the Bath institution, having copied several of the details of the bank at Edinburgh. The average rate of interest given was four per cent. Notice had to be given for withdrawing deposits. One regulation, new at that period, which was a suggestion of Mr. Rose, empowered the officiating clergyman or other responsible person, in adjacent parishes, to receive sums “on account of the institution,” and remit them to the treasurer at Southampton. It was stipulated, however—and this had an ill effect upon the public, though the proviso was by no means unreasonable in itself—that the institution should not be answerable for the money until it absolutely reached the office. We will here refer to two other original English savings banks, quite equal in importance to those of Bath or Southampton. The Exeter Savings Bank, since better known as the Exeter and Devon Bank, was established in 1816, principally through the exertions of Sir John Acland, one of the county members. The rules of this bank limited the amount which could be deposited to 50l. in the first and second years, and 25l. in any succeeding year. The distinguishing feature about the Exeter bank was the application, attended with much greater success, of the Southampton plan of rural or branch banks. In 1817, there were sixty of these branch banks, all contributing sums to the parent bank through village clergymen, who acted as the agents. The plan only entailed a trifling expense for printing, postage, &c., and even these expenses were paid out of a fund raised by voluntary contributions. At the date of the first enactment relating to savings banks, this bank had 946 depositors, who had paid in 14,525l. in 1,380 deposits. The interest given was at the rate of four per cent. Within the two years of which we have spoken, only 984l., or about a fifteenth-part of the deposits, were paid as withdrawals.

The original Hertford Savings Bank was a charitable concern, after the fashion of Mr. Smith's at Wendover. “The Sunday Bank,” as it was called, was established about the year 1808, by the vicar of the place, the Rev. Thomas Lloyd. Sums of from sixpence to two shillings were received by the benevolent pastor from his poorer parishioners after morning service on Sundays, and in this way about 300l. a year was invested between 1808 and 1816. The money did not accumulate from year to year, but was repaid on New Year's day, with the addition of ten per cent. interest, which the vicar was able to give by the help of some charitable funds at his disposal.

We must now, without referring to other early banks, such as the important institution in St. Martin's Place, London, and other societies, turn to Dr. Duncan, whose exertions on behalf of savings banks were much greater than those of any other person, and which exertions, more than any original suggestions which he may have made with regard to them, entitle him to the foremost place in any history of savings banks. Dr. Duncan's claim to be considered the founder of savings banks rests on the ground of his having originated and organized the first self-sustaining bank, and in having succeeded in so arranging his scheme as to make it applicable not to one locality only, but to the country generally.[18] It remains to be seen whether the bank established by Dr. Duncan in his own village answers the description here given of the distinctive character attaching to the banks of his proposing. It is very true that all the banks established up to 1810 partook very much of the character of eleemosynary institutions, supported in great part by the benevolence of the rich, and therefore very unsuitable to some localities, where the benevolent rich did not preponderate. Dr. Duncan's great merit—merit for which he has received neither enough credit nor praise, but which should entitle him to a high place in the ranks of those who have sought to do their fellow-men good service—seems to us to lie in having deeply studied the nature and wants of the industrial classes; in having modified existing proposals in order to make them suitable to the general requirements; and, finally, in having laboured with unremitting energy to make his plans known around him, and to secure their general adoption. A writer in the Quarterly Review of October, 1816, incidentally referring to Dr. Duncan and his proposals for parish banks, says, “It is our belief, founded on no slight investigation, that but for this Scotch clergyman, there would at this time have been found only a few insulated establishments for the savings of industry, of which the intelligent and wealthy would have had little knowledge, and from which the lower classes in general would have derived no advantage.”

Henry Duncan, who was the son of a Dumfriesshire clergyman, was born at Lochrutton manse, in that county, in the year 1774. At the age of twenty-five he too was ordained a clergyman, and appointed to the charge of the parish of Ruthwell, a remote locality in the same county. When very young, it is said, he showed remarkable powers of mind; and it appears he early exercised them in writing for the young, with whom he was an especial favourite. Before he was thirty he had made great progress in geology, and a book he published on the subject when he was about that age gained him the friendship of Dr. Buckland and Mr. Sedgwick. Perhaps, however, he showed most zeal during all the periods of his life in the prosecution of schemes for the benefit of the poor and distressed around him; and his manse in this way, lonely as it was, and far from the busy haunts of men, soon became a place of resort to much of the young and remarkable talent to be found in that part of Scotland. David Brewster, and James Grahame, the Sabbath bard, Dr. Chalmers, and Dr. Andrew Johnson, were frequent visitors beneath his roof; Robert Owen, then an amiable enthusiast in the walks of philanthropy; Thomas Carlyle, a young man who had not then emerged to fame; Robert McCheyne, and many others who subsequently rose to eminence, were friends of the village pastor, and frequently met to talk over with him different schemes of practical benevolence. “Few, indeed,” says his biographer, “whose lot has been cast in a retired spot like that of Ruthwell, have been more fortunate in attaching the affection and good-will of so many of the best class of their fellow men,” and the boast is neither an idle nor a vain one. Mr. Duncan must have been no ordinary man to have brought round him such a circle of friends. His literary abilities were of no mean order, but gave a charm to all he wrote. Delighting in humble usefulness, he edited, in 1809 and 1810, a number of Tracts for the instruction and moral improvement of “the lower orders,” to use the vulgar term then in constant use. The greater part of the work seems to have been the production of his own pen. One series of these Tracts, called “The Cottage Fireside; or, The Parish Schoolmaster,” was afterwards published separately with Duncan's name attached, and had a very large sale at the time. “In point of genuine humour and pathos,” says a high authority of that period,[19] “we are inclined to think it fairly merits a place by the side of 'The Cottagers of Glenburnie;' while the knowledge it displays of Scottish manners and character is more correct and more profound.” Whether the plans which he laid for the benefit of the poor, and which occupied so much of his after life, came up at any of the réunions at his house, we have no means of knowing. However it was, we have Mr. Duncan's own statements to show that they were originated in his mind by the frequent discussion at that time of the question of poor-rates, and the endeavours on the part of many of his friends to prevent their introduction into Scotland. It is also clear, that though Mr. Whitbread's name is never mentioned, the parish minister had heard of his scheme, and had been much struck with it. The result of Mr. Duncan's reflections on the subject were given in the Dumfries Courier, with which paper he seems to have had some literary connexion. A discussion ensued in the columns of this paper, in the course of which some books and pamphlets on cognate subjects were forwarded to Mr. Duncan by Mr. Erskine, afterwards Earl of Mar. Among the pamphlets he found a very curious and ingenious paper by John Bone, the originator of a charitable institution in London, the plan of which was there sketched. The Society was called by the whimsical title of “Tranquillity, or an institution for encouraging and enabling industrious and prudent individuals to provide for themselves, and thus effecting the gradual abolition of the Poor's Rate.” This pamphlet, which we have carefully examined, contains, among much matter of a visionary and impractical kind, many proposals for the safe keeping of the savings of the poor similar to those acted upon in the case of the charitable bank at Tottenham. These subordinate provisions attracted the notice of Mr. Duncan, as he himself admits, and he thought that if he could in any way reduce them to a regular scheme, the result would be beneficial to the working classes, wherever they might be adopted. He resolved to form some such scheme and give it a fair trial in his own parish, when, if successful, he would endeavour to get it introduced elsewhere. With this object he published a paper, as a sequel to the discussion he had commenced in its pages, in the Dumfries Courier, in which paper he directly proposed to the gentlemen of the county the establishment of a Bank for Savings in all the different parishes of the district. “The only way,” said Mr. Duncan in making these proposals, “it appears to me, by which the higher ranks can give aid to the lower in their temporal concerns, without running the risk of aiding them to their ruin, is by affording every possible encouragement to industry and virtue; by inducing them to provide for their own support and comfort; by cherishing in them that spirit of independence which is the parent of so many virtues; and by judiciously rewarding extraordinary efforts of economy, and extraordinary instances of good conduct. Friendly Societies, excellent as they are in their way, do not in every respect appear to be calculated for this intended effect; advantages are held out which cannot always be realized, but in simple Parish Banks there can be no objection of this sort.” Mr. Duncan met with little response to his appeals from the gentlemen of the neighbourhood, but he resolved to make the attempt single-handed. The fact that an institution of the kind contemplated could possibly be carried out by a single individual, however benevolently disposed, is evidence enough of that person's sagacity and perseverance; but the ordinary difficulties were greatly increased by the circumstances in which this particular parish where Mr. Duncan was located was placed. Few parishes, we are told, presented so many and such unusual obstacles to the progress of a scheme of this kind. Almost every adult member of the parish belonged to some Friendly society, and many of these found it extremely difficult to fulfil their engagements to the established societies. Again, there were few, if any, resident heritors or proprietors of the land to whom Mr. Duncan could look in any difficulty that might arise, or to whom he could look for any assistance of a pecuniary kind. Nevertheless, he resolved to commence. He had arrived at that experience of human kind which made him understand that, in even the poorest family, “there are odds and ends of income which are only too likely to get frittered away in thoughtless extravagance.” Could he but induce the mass of the people to comprehend the value of the savings which might by a reasonable economy be gathered from this source alone, and could he succeed in supplying the means of investing these savings securely, affording them at the same time the prospect of a fair rate of interest, not from charity, but from the resources of trade, he was confident the hopes he cherished would be realized.[20] The scheme was started in May, 1810, and savings to the amount of 151l. were deposited under the stipulated conditions during the first year. In the two succeeding years they rose to 176l. 241l. and in 1814 to 922l.

Mr. Duncan's work was far from completed when even his most sanguine expectations were realized in the progress of the Ruthwell Bank. His advice and assistance was now continually sought in aid of the formation of similar institutions, both in Scotland and England. In 1813, “the Edinburgh Society for the Suppression of Beggars” conceived the idea of adding to their already extensive operations a Savings Bank on some similar principle to his. A neighbour of Mr. Duncan's, who was also a member of the Edinburgh society, communicated a full account of the Ruthwell Bank, and all the accounts of it which had up to that time been published. The opening of the Edinburgh Bank, of which we shall presently speak more at length, took place in 1814. In 1814, Mr. Duncan paid a long promised visit to Kelso, in order to forward the proposals for a Savings Bank at that place. Mr. Duncan relates[21] that during his journey to Kelso he passed through the town of Hawick, and was much gratified to find that his scheme was freely talked of there. In the shop of one of the booksellers of the town he found a large number of copies of an account of the Ruthwell Bank wet from the press, which had been taken from the pages of the Dumfries Courier and supplied by himself. These handbills, which likewise gave a copy of the Rules of the Parish Bank, had been printed by order of the magistrates of the county at their ordinary meeting. Finding that his scheme had many favourers in Hawick, he promised to call on his journey home and assist them in the formation of a bank. On his arrival at Kelso an important meeting was held, with the Duke of Roxburgh in the chair, when Mr. Duncan addressed the meeting; the Kelso Savings Bank, one of the most important of the Scotch institutions, being the direct result. The number of letters which Mr. Duncan received and wrote per day is described as something enormous; they arrived by every post, not only from his own and the sister country, but even from Ireland. Not only did these letters contain requests for information and advice; but they frequently were of a controversial nature, and generally from such people, ardent friends of the poor, as required consideration and some reply. That Duncan was an agreeable and clever correspondent is evident from his published letters; that this correspondence was voluminous we can well believe. With a view of lessening the amount of his labours in this respect, he was induced to publish a full account of his scheme, together with all the rules and regulations for its working; and this pamphlet, which came out in 1814, went through three editions very rapidly. Even at this date Duncan's “Essay on the Nature and Advantages of Parish Banks” will well repay perusal, and besides, its intrinsic worth as a literary production is interesting as the first published pamphlet on a subject which will always possess attractions to the philanthropist, if to none else. We have the clearest evidence that Mr. Duncan laboured with uncommon zeal to spread a knowledge of the plans he proposed, and to help to their general introduction; and it is a matter of wonder to us, that, whilst many names are familiar to the world who did not do a tithe of the real hard work he did to benefit the poor around him, Duncan's name should be for all essential purposes really unknown, and that but for the filial regard of his son, scarcely an account of his existence should have survived him.[22] Speaking during his life time, the Quarterly Review warmly noticed his labours of love: “Justice leads us to say that we have seldom heard of a private individual in a retired sphere, with numerous avocations and a narrow income, who has sacrificed so much ease, expense, and time, for an object purely disinterested, as Mr. Duncan has done.” Some years before his death, in 1846, Mr. Duncan attained to the honorary degree of Doctor of Divinity, and he was for one year chosen Moderator of the Assembly of the church to which he belonged. The Duncan Institution at Dumfries, one of the few mementos of the man who did so much for Savings Banks, serves the purposes of a Savings Bank in the principal town of his native county, a statue of Dr. Duncan being very appropriately placed in front of it.

Not long after the establishment of the Edinburgh Savings Bank, there was great contention as to whether that bank or Dr. Duncan's at Ruthwell had the priority of merit on the score of general advantage. Pamphlets were written on the subject, not always without bitterness, and even the great Reviews interfered. The dispute was scarcely called for at that early period, seeing that posterity is best able to judge of such matters, and there was nothing dependent upon an earlier settlement. The Edinburgh bank followed the village bank by three and a half years, so it was not a claim for priority of establishment. The question as to which of the two possessed the materials best fitting it to be a model for all subsequent banks would not be so easily settled; and, in fact, this was the point in dispute. Seeing the question was one of considerable importance for many years, and is so still in an archaic point of view, we cannot do better than attempt to give some idea of the difference between them, as gathered from the two accounts now before us.[23] Unquestionably the arrangements of Mr. Duncan suffer considerably by a comparison of points, and though we admire the character and arduous labours of the man, there is not the slightest need that we should abstain from hostile criticism of his measures. For example, Mr. Duncan laid great stress on the fact of his bank being the first self-sustaining bank, and the first not partaking to any extent of the nature of a charity. It will be seen how far this was absolutely true. The Ruthwell institution consisted of ordinary, extraordinary, and honorary members. The ordinary members were the poor who deposited their savings; the extraordinary, those who paid to an auxiliary fund an “annuity” of 5s., or a single donation of 2l.; and honorary members were those who paid to the same fund an “annuity” of 1l., or a single donation of 5l. The general business of the society was transacted by a Court of Directors, consisting of a Governor, five Directors, a Treasurer, and one or more Trustees, to be chosen from the honorary and extraordinary members. The court acted under the superintendence and control of a Standing Committee, which consisted of fifteen persons chosen from the self-same kind of members. Both these bodies were subordinate again to the General Meeting, composed of all the members of the two courts mentioned, and all the ordinary members of six months' standing. We scarcely think there could be any possible necessity for such elaborate machinery. In circumstances such as the rural population of Ruthwell, were cast, one would have supposed that rules as little stringent as possible, hampered with conditions as few as possible, would be needed, to induce that population to save the trifles they could spare. Inducements were held out to encourage and reward the frugal and attentive; and so far admirable: but the system of fines inflicted upon those who did not deposit a certain sum each year was a questionable proviso. Mr. Duncan put the case very plausibly in his Essay, where he said the chief defect of the scheme was, originally, the want of some strong motive for regular payments; and, “as what we have no pressing motive to do at a particular time we are apt to delay till it is beyond our power to do it at all,” he decided to fix a small sum as penalty, should not a certain moderate amount be deposited each year, a decision which we think was neither proper nor wise. The regulations acted upon in the case of a proposed new member were, we think, equally uncalled for, and likely to scare the well-disposed away, rather than induce them to join. Before a person's first deposit could be received, the elaborate machinery of management commenced to make inquiries into the age, the family affairs, and moral conduct of the proposed contributor, and according to the report which followed, it was considered whether his deposits would be admitted at all, or if admitted, what rate of interest it would be proper to allow. The society lodged its money with the British Linen Company, and got five per cent. interest for it. Four per cent. was the usual interest allowed to depositors; to those, however, of three years' standing whose deposits reached 5l., an indulgence of the higher rate of 5 per cent. was made, provided the depositor wanted to get married; in case of his having arrived at the age of fifty-six; to his friends in case of his death; or, fourthly, in case the possession of the money should appear to the Court of Directors, after due inquiry, to be advantageous to the depositor or his family.[24] To put a climax, as it were, upon this charitable disposition of a man's own hard-earned savings, we would merely recite the fifth statute, which directs that “when the depositor shall have become incapable of maintaining himself, from sickness or otherwise, a weekly allowance may be made to him, at the option of the Court of Directors, out of the money he has deposited.”

The auxiliary fund, to which the honorary and extraordinary directors were required to contribute, was employed in awarding premiums to those who were most regular with their deposits, especially to those regular depositors who should have exhibited proofs of superior industry or virtue. It may well be thought that, in such delicate matters as were thus dealt with, differences of opinion would arise, so it was wisely provided, that any aggrieved member should have the power of appeal from the Court of Directors to the Standing Committee, and from the Standing Committee to a General Meeting, whose decision should be final. “The example set by Dr. Duncan at Ruthwell,” says Mr. Smiles,[25] “was shortly followed in many other parishes in Scotland, and in most of the principal towns in England,” and, so far, we have seen this is true. What follows is certainly open to question: “In every instance, the model of the Ruthwell Bank was followed, and the vital, self-sustaining principle was adopted. The Savings Banks were not eleemosynary institutions, nor dependent upon anybody's charity or patronage; but their success rested entirely with the depositors.” Our readers may judge from the details of management which we have given how far this is borne out by the facts of the case; for ourselves, we are slow to take from the merit which undoubtedly should attach to Dr. Duncan. There were, doubtless, many circumstances connected with the minister's own parish which made the arrangements to which we have referred more excusable; but there must have been many districts where the poor would never suffer themselves to be patronized, petted, or provoked in the same manner. Hence the inapplicability of the details to the country generally. Real, honest, independent workmen have always had a great dislike to be experimented upon, “raised,” or “elevated,” in the sense that some men use the terms; what was felt to be required at this early period was, that there should be afforded some facility for the depositing, without any unnecessary trouble or annoyance, such small sums as the poor might have to spare, and wish to save; and that this money should not only be safe, but produce interest according to its value in the market, and neither more nor less. That arrangements made with this laudable object should be accompanied with others which should have the tendency, however remote, to disgust and repel the poor, was unfortunate, to say the least. Any interference with, or superintendence over the family affairs or the private conduct of members, was likely to be, it seems to us, most irksome, and no less to the poor than to the rich. The arrangement by which various rates of interest were given to different classes of depositors, according to their good or indifferent characters, was eminently arbitrary, if not unfair.

We have already alluded to the Edinburgh Savings Bank, instituted after the parent bank at Ruthwell, and to some extent upon its model; the offspring, however, in many points presented a happy contrast to the Ruthwell Bank, in the simplicity and greater fairness with which its affairs were managed. As it is now a matter beyond doubt that many banks formed subsequently were started on the model of the Edinburgh institution, a few words of description of its principal new features may not be out of place. All depositors were paid the same rate of interest; they deposited their savings without any preliminary investigation of any sort; and whilst the management was not left, even in part, to the classes it was designed to benefit, contributors had nothing to do but pay in such sums as suited them, and withdraw at pleasure, altogether as the classes above them would deal in the ordinary bank. From the pamphlet published in the same year as that of Dr. Duncan's, and to which we have already alluded, we are enabled to give some account of the plan of working in the Edinburgh Bank; and it is very interesting at this distant period to see how nearly identical with the modern Savings Bank this early one was, or rather, we think we ought to say, how closely the example of the Edinburgh Bank has been followed. The bank, we find, was open every Monday morning between nine and ten o'clock. No less sum than one shilling could be received. The uniform interest paid was at the rate of four per cent.[26] The money might be paid back at any time on a mere demand and production by the depositor of his deposit sheet. Each depositor was furnished, on making his deposit, with a duplicate of the leaf of the ledger in which his account was kept; on each succeeding visit he brought the duplicate with him, and each separate transaction was entered in the ledger and on the duplicate at the same time. This arrangement, as might have been expected, soon gave place to the more convenient bank-book at present in use. It will be observed that up to this time, and some years subsequently, the Savings Banks had no connexion with Government, and the funds realized were accordingly deposited with some banking company, and, as a rule, the interest received was at a higher rate than has since obtained. One feature in the Edinburgh Bank, as in other Scotch banks of the period, is unknown at present. When the deposits of any one person amounted to ten pounds (the minimum sum received by an ordinary bank), he was presented with an interest-note upon any banking firm he chose to name for the amount. Henceforth he held an account with the bank in question, receiving a higher rate of interest, and a strengthened security for his money. The Savings Bank, however,—and this is noteworthy,—was still open to him as a bank for his small accumulations as before, and until they again amounted to the sum of ten pounds. The Edinburgh Bank, thus restricted to such small sums and simple operations, was able to get through its work with little trouble and a minimum of expense. Perhaps here the endeavour to save expense proceeded to too great an extent, and resulted in more gratuitous service than the depositing classes at any time have cared to see. No honest man would object to have the legitimate expenses of a careful management deducted from the interest of his savings. In recommending the system to others, the penurious style in which it was thought not improper to do the business is manifest in the language adopted. “It can scarcely be doubted,” says the author of the pamphlet, “that in every parish and district there will be found persons benevolent enough to perform the office of attending to this work, viz. one hour per week, gratuitously, by turns; and it will be easy to procure a room rent free. Thus the only expense of management will be the purchase of stationery; and for this purpose the saving already described (a small difference between the interest paid and the interest given) will be amply sufficient, without lowering the rate of interest allowed to the contributors. It may be supposed, indeed, that some expense may be incurred for transmitting to the great house (the banking company chosen) the money deposited in the Savings Bank.” “But we are persuaded,” adds this man of cheap expedients, “that in every case a safe and free conveyance will be furnished by the principal proprietors or inhabitants of the parish.” The growth of Savings Banks, and the progress of banking generally, soon left out of view all such minor considerations as these. Such was the excellent institution at Edinburgh, and it deserved all the success it obtained. At first it was thought that its connexion with the Society for the Suppression of Beggars retarded its progress; and it was not at all wonderful that this was the case.

Perseverance, and the laborious exertions of its originators, especially the efforts and high character of Mr. (afterwards Sir William) Forbes, soon made up what the bank may have lost by this connexion, and in five years from its formation was in every respect a decided success. Without ostentation, and without trenching in any respect on the independence of those who needed their assistance, the originators of this bank went on, not only in Edinburgh, but in other Scotch towns to which their influence extended, and with which the metropolis has always some connexion, and their endeavours to cope with the improvidence and carelessness of that period resulted, in a few years, in a complete spread of the principle. What society owes to the men who at this early date laboured with such zeal and devotion in behalf of their fellows, little thought has ever been given; the names of many of them have not even been preserved. It ought to have been far otherwise. “It would be difficult, we fear,” says Francis Jeffrey in an early number of the Edinburgh Review, “to convince, either the people or their rulers that the spread of Savings Banks is of far more importance, and far more likely to increase the happiness, and even the greatness of the nation, than the most brilliant success of its arms, or the most stupendous improvements of its trade or its agriculture. And yet we are persuaded that it is so.”[27]

Before we close this notice of original Savings Banks, we would refer to their establishment in Ireland. The first Savings Bank in the sister country of which record is made was one established at Stillorgan in 1815, and was called the “Parochial Bank.” The Rev. John Reade, the parish minister of that place, was not only the founder of this bank, but also of the second venture of the kind; for, on removing to Clondalkin, he would seem to have taken his benevolent disposition with him, and to have repeated the process among the poor of his new charge. A peculiar arrangement existed in these early Irish banks, of which no trace is found elsewhere. The deposits of each subscriber were kept separately, and open to the inspection of the owner when he brought any fresh deposit, on which occasion he might count his money if he chose. So soon as the deposits of any person had reached 1l. the money was invested in Stock, and produced interest, but not till then. Both banks eventually formed the nuclei for ordinary Savings Banks after the act relating to Irish banks was passed in 1817. The Belfast Savings Bank, opened in 1810, was the first formed after the ordinary model, and has always been very successful.

[11] Mr. Scratchley's Practical Treatise on Savings Banks, 1st edit. p. 36.

[12] See the Reports of the Society for Bettering the Condition and Increasing the Comforts of the Poor, vol. iii. which contains a full account of this earliest Savings Bank.

[13] “To facilitate the saving of small sums of money and to encourage young labourers to economise their earnings with a view to provision for marriage, it would be extremely useful to have county banks, where the smallest sums might be received, and a fair interest granted for them. At present, the few labourers who have a little money are often greatly at a loss to know what to do with it; and under such circumstances we cannot be surprised that it should sometimes be ill-employed and last but for a short time.”—Malthus. Essay on Population, 1803.

[14] Hansard, vol. viii. p. 887.

[15] The most important clauses of this Bill we have given in the Appendix (A). Besides its intrinsic importance, it is very interesting, as viewed in the light of subsequent measures. The similarity of Mr. Whitbread's proposals to the measures which nearly half a century afterwards have been carried out, cannot fail to strike the reader.

[16] An Explanation of the Principles and Proceedings of the Provident Institution at Bath. By John Haygarth, M.D., F.R.S., one of the Managers, London, 1816.

[17] Observations on Banks for Savings. By the Right Hon. George Rose. London, 1816.

[18] Memoir of Dr Duncan. By his Son, the Rev. G. J. C. Duncan. Edinburgh, 1848.

[19] Quarterly Review. October, 1816.

[20] Memoir, page 98.

[21] Ibid, page 105.

[22] Strange to say, Dr. Duncan's name does not find a place even in Mr. Robert Chambers's elaborate Dictionary of celebrated Scotchmen, an oversight much to be regretted.

[23] (1) An Essay on the Nature and Advantages of Parish Banks, together with a corrected Copy of the Rules and Regulations of the Parent Institution at Ruthwell; and Directions for conducting the details of business; Forms showing the methods of keeping the Accounts, &c. By the Rev. Henry Duncan, Minister of Ruthwell. Edinburgh. 1815.

(2) A short Account of the Edinburgh Savings Bank, containing Directions for establishing similar Banks, &c. Second Edition. Edinburgh. 1815.

[24] Duncan's Essay page 27.

[25] Workmen's Earnings, Strikes and Savings, page 37.

[26] One clause in the Rules states that “Interest is to be calculated by months, as the calculation by days on such small sums would be extremely troublesome, and without any adequate advantage.”

[27] Edinburgh Review, xlix. page 146.

CHAPTER III.

EARLY LEGISLATION ON SAVINGS BANKS—1817 TO 1844.

“The promotion of economical habits amongst the people is so much a matter of national concern, that we cannot conceive any direction in which the powers of Government would be more beneficially directed than in giving effect to schemes calculated to produce such valuable social results among the humbler classes of the people.”—Mr. Smiles.

It was not till Savings Banks had been regularly organised in this country, and not before they had achieved some considerable success, that the Legislature interfered in any way with regard to them. That the ruling classes, however, were not slow to encourage these undertakings is sufficiently manifest, when it is remembered that the first legislation on the subject dates from 1817, or only seven years after Dr. Duncan had organised his parish bank; and further, that the purport and effect of the bill then introduced was not to embarrass and hamper the new institutions, as was too often the case with new and partially-tried measures, but to offer them protection and encouragement. Prior to 1817, Savings Banks were simply voluntary associations, established, as we have already seen, by some benevolent gentlemen, who took a sort of leading part in the affairs of their respective neighbourhoods, and who were actuated in doing so by their desire to afford to their poorer neighbours help and inducement to save money. Up to this time the confidence entertained by the poor in the integrity and well-meaning of the rich was the only security they had that their money was in safe keeping; and it is only fair to add, that, so long as Savings Banks were promoted and kept up in this semi-paternal fashion, that confidence was seldom, if ever, misplaced. Savings Banks were soon seen, however, to possess germs of national good which would require greater means of development to be brought to bear upon them; and it was quite as plainly apparent that the more they extended, the greater the necessity became that they should be legally recognised and protected. The first mention of the new institution in Parliament was made by the Right Hon. George Rose, who was at the time Treasurer of the Navy, and one of the Committee of Council for the affairs of Trade and Foreign Plantations, and who, at the close of the session of 1815, and again in April, 1816, asked leave to bring in a bill, “to afford protection to Banks for Savings.” Mr. Rose, for the next two years, took a leading part in all discussions on the subject, as indeed he did on all kindred subjects.[28] He had written on Poor Laws and Benefit Societies; and, on account of his having, towards the close of the last century, carried through Parliament a bill legalizing Friendly Societies, was generally looked upon as an authority on such subjects. The first speech of the hon. gentleman on Savings Banks was remarkably able: he referred to the immense good which such banks as those of Edinburgh and Bath had done, and were capable of doing. The instances which had come before him of persons who before the establishment of Savings Banks had never saved a penny, but who then had made ample provision for a rainy day, were cheering in the extreme. He proceeded to give particulars of several instances of the kind, mentioning them, as he put it, “to induce hon. gentlemen to exert themselves, and that they might not sit with their hands before them, believing that nothing could be done.” The moral good to be expected from these banks was great and obvious. He hoped and expected that they would gradually tend to revive in the lower classes that decent spirit of independence, now almost extinct, which shrinks from accepting parochial relief; the poor man would learn to regard his own industry and labour as the source whence he was to derive temporary aid in the hour of sickness, or permanent support when the approaches of age should unfit him for active exertions. Not that this matter was applicable only to the poor; a consideration of the subject in all its bearings might well be given to it by the rich on their own account; he thoroughly believed that the poor-rates of the country would diminish in proportion to the spread of Savings Banks among the masses. Mr. Thompson, a Yorkshire member, expressed his warmest approbation of the proposed bill. In Yorkshire, he knew there was a great desire to establish Savings Banks of this sort, but the better classes were afraid of doing so, on account of their apparent complexity, and because they had not received up to this time the sanction or countenance of the Legislature. He hoped the provisions of the proposed bill would be as simple as possible, and afterwards that the bill and its clauses would be made as public as possible. Hundreds of working men, to his knowledge, might easily save ten shillings a week, whereas they did not then save a penny; nor could they be blamed to any great extent so long as they were without the requisite machinery for acting differently. Establish these banks, and place their working under proper Acts of Parliament, and he should then say that many who were accustomed in times of scarcity to solicit parochial relief would have no excuse for their conduct; if they did not avail themselves of the opportunity of becoming independent he would rather punish than assist them. Thus early were our legislators alive to the maxim that “the only true secret of assisting the poor is to make them agents in bettering their own condition.” The Chancellor of the Exchequer (Mr. Vansittart) believed that nothing tended more to the independence of the poor than their learning to support themselves by their own exertions. He thought the object of the proposed bill would be congenial to the feelings of the whole House. On the part of the Government, he was ready to offer his best assistance on behalf of an institution such as the Savings Bank, where rich and poor might meet together and mutually combine in promoting, under Divine protection, their natural rights. “There, forgetful of those petty distinctions which temporary circumstances had created, they met as brethren, each to do his duty to his neighbour.” After an Irish member had expressed his wish that the same bill might be extended to Ireland, where, he truly said, such habits as these banks inculcated were most urgently needed, even more so than in England, this one-sided debate was closed.[29] The bill was read a first time on the 15th of May, 1816. It provided, that any number of individuals might enrol themselves as Trustees of a Provident Institution or Savings Bank at the Quarter Sessions. It was not meant by this to give any power to Justices of the Peace, but simply that the act of enrolment might thus be made in as public a manner as possible. It was further arranged, that the Rules proposed for the management of the new Savings Banks should in like manner be left with the Clerk of the Peace for the respective counties. The bill authorised the Trustees or Managers to appoint such officers as were likely to be needed, and required that in all cases where the persons were to be entrusted with money, they should give reasonable security. It was only further provided, that depositors should not be prevented from applying for parish relief, but that, if any dispute arose on this point, the decision in the matter should be left with the magistrates in Quarter Sessions. The session being near its close, and several members having expressed their sense of the importance of the subject and the necessity of producing a well-considered bill to regulate these banks, the bill was withdrawn till the next session. On the 15th of February, 1817, Mr. Rose again returned to the subject, and got leave to re-introduce his bill. He did not on this occasion enter minutely into the consideration of Savings Banks, further than to express a conviction he had, “which daily became stronger,” that these institutions, if properly directed, would have a very direct influence on the vexed question of Poor Law relief. He contended, that, if they became generally introduced through the length and breadth of the country, they would gradually mitigate, and then do away with, the evils attending the system of the English Poor Law; and he very reasonably urged that any measure which would tend, even remotely, to such a desirable object, was deserving of, and ought to have, the hearty support and countenance of the Legislature. Mr. Curwen, an authority on this phase of the subject, held that there could be only one opinion as to the utility of the banks, but he was satisfied “it was an error to imagine they would essentially contribute to the alleviation of the present distressing situation of affairs.” Nothing short of a measure which in its nature might have a compulsory influence over the minds of the people, to teach the poor and the peasantry that the means of relief, of content and happiness, were within the reach of their own exertions and industrious application, would be effectual. After a little further opposition, during which another member said that the bill would do more harm than good—that Savings Banks were going on extremely well without any Act of Parliament, Mr. Wilberforce, ready at all times to forward any measure which seemed likely to benefit the poorer and more defenceless portions of society, congratulated his friend on his proposals, and said that the system of Savings Banks pleased him most because it was so eminently adapted to teach the poor how much they might do for themselves by their own self-denying exertions. This was one of the class of things for which he, the House, and the country ought to be extremely indebted to all who had been instrumental in originating it and bringing it to greater perfection. “Whatever difference of opinion,” continued Mr. Wilberforce, “there might exist as to the Poor Laws, it was of all things desirable to countenance and foster so sanative a principle as that on which Savings Banks were founded.” The second and principal reading of the bill took place on the 15th of May, 1817, on which night many petitions were presented in its favour, and only three—viz., from Norwich, Hertford, and St. Paul's, Covent Garden—against it. All opposition, however, to the bill resolved itself into simply contesting one or two of its clauses. An attempt was made to throw out the clause which obliged the Trustees of Savings Banks to vest all moneys received by them in the Public Funds, several members contending that at any rate some of the money might be much better employed on mortgage, to the relief of many different interests in the immediate neighbourhood, and to the greater productiveness of the money so lent. The arguments used on this occasion were very similar to those occasionally used now in relation to the same subject, and they were then as unavailing as they have been subsequently: the preponderating opinion was that the safety of the investments was, and ought to be, the first and greatest consideration. The clause, however, which proposed the giving of premiums out of the parish funds to those contributors who had done best in the way of saving money, fared worse, being rejected in committee almost unanimously. The growth of such principles could not be forced, and, if they grew at all, they would do better without the crutches of eleemosynary aid. At the third reading, a spirited contest arose about the proviso that depositors in Savings Banks should not be disqualified from receiving parochial relief. Mr. Rose contended that anything, which would have a tendency to make the poor think that the richer classes were legislating with ulterior objects in view, such as to get rid of poor-rates, would throw obstacles in the way of Savings Banks. There would be no need to think of such considerations in a few years, when Savings Banks were more firmly fixed amongst the institutions of the country; it was highly expedient, however, that they should now be allowed to have their weight. In a few years, argued he, the poor will have formed habits of saving, and so they will have become independent, and be above throwing themselves on the parish, at any rate with impunity. Mr. Wilberforce held and expressed the same view, which Lord Milton and others opposed; the clause was retained, notwithstanding, by a majority of thirty-three in a House of eighty-seven members. With this discussion the bill passed, and became law in August, 1817. As this bill[30] is the beginning of legislation on the subject of Savings Banks, we would here state in outline the principal objects with which it dealt. A sort of Supplementary Act, cap. 105, was passed to apply more particularly to Ireland, to suit the Irish members, who, when the matter was under discussion, argued that the same Act would not deal so well with Ireland, and who, therefore, wished the two countries treated separately. Both the acts required that the Rules of the proposed Bank for Savings should be deposited with the Clerk of the Peace of the county in which the bank should be situated, though no discretionary power was left with the magistrates in the matter. The Trustees and Managers were prohibited from receiving any profit from any transactions in these banks, and were empowered to pay over the moneys they received into the Bank of England, or Ireland (as the case might be), to the account of the Commissioners for the Reduction of the National Debt, the latter being instructed and empowered to invest them in Three per Cent. Bank Annuities. Interest on money thus deposited in the hands of Government was guaranteed to the Trustees of Savings Banks at the rate of 3d. per cent. per day, or 4l. 11s. 3d. per annum. The Act restricted the amount which any one depositor could place in a Savings Bank in England to 100l. in the first year, and 50l. in any subsequent year. In Ireland the limitation was 50l. in any year, though why this distinction was agreed upon does not appear.

It was not long before it was seen that the Act just described was defective in many particulars, and further legislation rendered necessary. During the year which elapsed after the passing of the Savings Bank Act, the progress of these institutions, in so far as the number and amount of their deposits were concerned, was great beyond all expectation. In nine months from the date of the bill of 1817, the large sum of 657,000l. had been deposited. The largest amount received at the National Debt Office during that period from any one bank was 32,000l., remitted from the flourishing Exeter bank; the smallest was received from a new bank just then opened at St. John's, Wapping, for the benefit of sailors living in that locality. By the middle of the year 1818, or less than twelve months after the passing of the first bill, there were no fewer than 227 banks established in England and Wales, and about an equal number in Ireland and Scotland. That the encouragement which the bill had given was real is evident from the fact that more than half the entire number of English banks were first opened in 1817-18. So rapid indeed had been the development of the measure, that it was soon apparent that the increase of deposits was in a ratio far beyond any possible increase in the amount of wages or profit from which small savings could have been made. No doubt that now, for the first time, many hoarded savings saw the light, and began to bring in to their owners a return; but even this does not account for such an increase of business. Towards the close of 1817, 20,000l. was deposited in one day, in a town in the North of England where a bank had just been opened, and it was known that very little of this money belonged to the industrial classes.

The interest given for the investment made, it appeared, was attracting a much higher class of depositors than it was ever sought to encourage, or than the Act was intended to benefit. The interest guaranteed by Government has already been stated. In amount, it was at least 11s. 3d. more than the interest yielded by any other Government security, while Consols did not bring in more than 3l. 5s. per cent. Many, we believe, in the first instance put their money into the Savings Banks to afford encouragement to their poorer neighbours or dependents, and in order to inspire them with confidence: and it will be well understood how necessary this was at the outset, seeing that at that time there were few means of inculcating sound political knowledge, or, indeed, information of any sort, among the great mass of the people, who too often were swayed hither and thither at the mere whim of some noisy and ignorant demagogue. Whether or not this sufficiently accounts for the fact of the better classes contributing to the early Savings Banks, it is clear that all classes soon found out that it was not possible to do better with their money, and hence allowed it to remain where it was. Several banks were very careful to exclude by their rules all but mechanics, servants, and persons in similar ranks of life, but the rest either had no such rules, or were very careless about enforcing them. One gentleman, possessed of 40,000l. was known to have deposited large sums of money in one Savings Bank in the names of his six children. On the 17th of March, 1818, the Chancellor of the Exchequer, influenced by such abuses as these, asked leave to bring in a bill to amend the Act passed last year. No trace of the proceedings of Parliament with regard to this little bill remains, but it seems only to have been meant as a temporary measure of relief till the whole subject could be more effectually grappled with. It simply provided for some alterations in the forms of debenture, gave power to Justices of the Peace to reject, for a sufficient reason, any Rules deposited with their clerks, and prohibited the arrangement by which a person might invest in a Savings Bank by means of a ticket or number, and without disclosing his or her name.

Shortly after this period, in the year 1819, a question was put to the Chancellor of the Exchequer in the House, which seems to have raised some merriment among the members. Ridiculous as it might seem, it only reflected the spirit in which many people spoke of the measures which had recently been passed with regard to the compulsory investments with Government of the money placed in the banks. In Lancashire, aided and stimulated by Mr. Cobbett, who all along sneered at the “bubble” of Savings Banks, the people got up an absurd cry, and long kept it up. Mr. Wilbraham, a Lancashire member, asked Mr. Vansittart if there was “any tittle of truth” in the reports that were so prevalent “that Government was about to seize the funds of the Friendly Societies and Savings Banks, and apply them to the payment of the National Debt. This report,” said the hon. member, “had been caught up by persons little conversant in political matters, and had actually caused the breaking up of Friendly Societies, to the great loss of those who had claims upon them.” He had no doubt the course of legislation had led to this report being circulated by designing persons, and though quite aware that it was impossible for the Government to touch any of these funds, he would like to hear a declaration on the subject from the authority which in that House was alone competent to give it. The Chancellor of the Exchequer said, that even after much experience of the extent to which malignity and absurdity could go in the propagation of reports injurious to the Ministry, he had not been prepared for such a rumour as this. “It was utterly groundless; there was not the smallest foundation for it, either in fact or possibility. Under the authority of Parliament, the money belonging to the institutions in question was kept entirely apart from the public money, and even if the Treasury were base enough, they had not the power to misappropriate these funds.”[31] Mr. Brougham observed that this was not the first time that such reports had been circulated, and such absurd cries raised. When the Education Committee was sitting, it was asserted that its intention was to seize all charitable funds, and to turn the two Universities into charity schools. In such cases as these facts or reason on such reports were very ineffectual, but he hoped that in this particular instance they would be of some avail.

Before we notice the further progress of legislation in respect to Savings Banks, it would be well to refer to their progress and operation in Scotland. None of the Acts passed up to this time in any way related to the Scotch banks. When Mr. Rose's bill was before Parliament, its application to Scotland was successfully opposed; a separate bill was introduced by Mr. Douglas, the member for the Dumfries burghs, in 1818, but this did not pass. The failure to obtain this act was said to be owing exclusively to the necessity for legislative interference not being felt in Scotland; it seems now much more likely that the failure was owing to the want of unanimity among the Scotch promoters of Savings Banks, Mr. Duncan taking a decided stand with the member whom he had influenced so far as to get him to bring in a bill, and the promoters of the Edinburgh bank, on the other hand, who kept up in this way the long-standing dispute which they had always had with “the Father of Savings Banks.”[32] There was certainly some reason why the same legislation was unnecessary for the two countries. There were many circumstances which rendered interference on the part of the Legislature necessary, or at least expedient, in the case of the English banks, and these circumstances scarcely in any way applied to Scotland. The chief of these were the Poor Laws, and the want of secure places of deposit for small sums to bear interest, and be payable on demand; the English bankers did not usually allow interest on money lodged with them, whereas in Scotland they gave a liberal return for it. The general dispute was at its height in 1819, when the Edinburgh Society published a report against any State interference, and when Mr. Duncan, who, as we have already said, was a strong advocate for parliamentary encouragement and protection, replied in a lengthy and able letter,[33] in which he clearly showed that difficulties and discouragements would surely be felt in the progress of Savings Banks, if they were not arranged according to law. The radical difference observable in the two classes of banks—and there were at this time 182 Savings Banks in Scotland with 7,000 depositors, and deposits to the amount of 30,000l.—was the difference between the Parish Bank at Ruthwell, and the Savings Bank at Edinburgh, for on one or other of these models all the Scotch banks were with very few variations formed. Mr. Duncan placed, or intended to do so, the management of his bank in the hands of the whole body of depositors; the Edinburgh bank excluded all popular interference in its management, and left every one to deal with it or not, at their pleasure. The Ruthwell bank confessedly, and as we have seen, partook of the nature of a Friendly Society; the Edinburgh bank as nearly as possible approached to the character of a commercial undertaking. The founder of the former was thus an advocate for minute regulations, while the patrons of the latter wished to be left at liberty to manage their affairs in their own way, and only to call in the help of the Legislature when real grievances needed redressing.

With the exception of a short Act[34] passed in 1820, by which it was provided that charitable institutions might deposit a whole or a portion of their funds with the Commissioners, no further legislation on Savings Banks was attempted till 1824. In this year the Chancellor of the Exchequer (Mr. Robinson) took up the matter where Mr. Vansittart had left it, and carried a Bill through Parliament still further to amend the law.[35] With a view to remedy still more completely the evil of classes, other than the industrious ones, investing their money in Savings Banks, this Act provided that the sum which could be deposited during the first year should be limited to 50l. and should stand at 30l. for any succeeding year. To provide against anything like evasion of these regulations, a form of declaration was introduced,—which we scarcely need say has existed up to the present time,—stating that the subscriber to it had not contributed to any other bank than the one at which he made the declaration. The Chancellor of the Exchequer endeavoured to carry a clause which required that this declaration should be subscribed by the proposed depositor in his own name, “and own handwriting,” in place of a mark or initials, but this was wisely discarded. This absurd proviso would have put an educational test in the way of those very classes whom, to the exclusion of all others, it was desirable to attract to Savings Banks. Another important clause succeeded better, and was plainly proper to the object meant to be served by it. No depositor could by this further clause invest more than 200l. excluding interest, in any Savings Bank. The case of the funds of Friendly Societies was the subject of another clause. It was only four years since these societies, as we have seen, were allowed to deposit their funds through the medium of Savings Banks; but the Act of 1820 had given rise to so much abuse, or to so much that seemed like abuse, that some alteration was necessary. The high rate of interest which had been guaranteed by law to these banks induced, not only individuals of rank and property, but large charities to place their funds in them: the result was a great burthen to the public, inasmuch as the excess over the ordinary rate of interest for public securities was thrown in by the Legislature with the object of increasing the provident disposition of the poor. As it was seen that, if this state of things continued, the original object of State assistance and countenance to Savings Banks would be defeated and the public in some degree prejudiced, it was proposed that no friendly society or charitable institution of any kind should deposit their funds in any bank. If the alterations now proposed did not suffice to preserve Savings Banks from the inroads of the rich, the Chancellor of the Exchequer saw no other means of meeting the evil than by reducing the interest given. He “should feel most reluctant to weaken the confidence which the public reposed in these banks, and which rendered them one of the greatest blessings ever conferred upon the country;” but the evil must be met in one way or the other, or with the loss of their normal character they would lose their efficiency.

The Act of Amendment then went on to deal with the responsibility of Trustees, the giant difficulty of Savings Banks from that time until now. The same arguments were used at this early period as at different times subsequently. Those who placed money in Savings Banks ought to have some security that that money was not made away with by some one through whose hands it would pass; and the Trustees, who had the sole control over the affairs of the banks, and appointed all the subordinate officers, were the persons who ought to give some security. On the other hand, enforce to the full the liability of Trustees, and the most able persons would be deterred from accepting so much responsibility, and would give up the connexion which they had already voluntarily assumed. It was now therefore settled that the Trustees should deposit all the money they received with the National Debt Commissioners, and that they should be held liable in case of default only to a certain amount. A legally and efficiently constituted bank should consist of twelve Trustees, each liable for 50l., or 600l. in the aggregate. This Act, it was also decided, should refer to Ireland equally as to England.

Early in February, 1828, Mr. Joseph Hume—who had not then been many years in Parliament, but who had already commenced that course of conduct in connexion with the public expenditure which, at first, gained him little but ridicule and derision, and subsequently the respect of friend and foe and the confidence of the entire nation—took up the question of Savings Banks, or more especially that part of it which related to the question of expense to the Government. Mr. Hume had already asked for returns of the progress of Savings Banks; but on the 6th of this month he required the production of an account, showing the amount of interest that had been allowed to them since they had become connected with the State in 1817. He tried to disabuse the mind of the members of the House as to his having any prejudice against Savings Banks. He told how he had been one of the earliest friends of these institutions and heartily wished well to them. When he found, however, that they had already cost the country half a million sterling, and were likely to cost still more as their numbers and efficiency increased, he thought it was high time to have the matter inquired into, and this expenditure stopped. Mr. Hume said that his original notion about Savings Banks,—which was likewise that of all he knew who had endeavoured to establish them,—was that each bank might, and therefore ought to maintain itself, and, whilst it enabled the poor to invest safely their 10l. or 20l. as cheaply and as profitably as the rich could their larger amounts, it should neither be a burthen on the charity of the benevolent nor an incubus on the State. Mr. Hume stated that he believed it would be found that up to January, 1827, the amount paid to Trustees, over and above what the money remitted to the National Debt Commissioners had produced, was 452,000l. By the arrangement of the Act of 1817, which ordered that a separate account should be kept of the moneys deposited with Government on behalf of Savings Banks, he was enabled to tell exactly how affairs stood. He found that Government had obtained interest on the Savings Bank Fund to the extent, in round numbers, of 2,250,000l. and had paid to depositors for the same 2,703,000l. Hence the loss[36] above given, which he had no doubt by the time the accounts were finally made up for the financial year ending in March would be half a million sterling. Mr. Hume went on to state that, if honourable members thought it proper after an inquiry to pay 40,000l. or 50,000l. a year, as a means of encouraging these banks, let them do so; perhaps he would not make any more appeals about it; at any rate, however, in this case, and if this state of things continued, he thought it would be only fair that Government, and not separate directors, should have the management and control of these banks. There was no possible uniformity among them; some paid one rate of interest, and some another; some charged much higher for paid assistance than others, and yet, with unvarying uniformity, he might have said, the executive granted the same high rate of interest to all, irrespective of how they disposed of it. The Returns were ordered nem. con. The Statement which Mr. Hume more particularly referred to is in its proper place among the “Accounts and Papers” for that year, and is as follows:—

A month afterwards, the Returns having been furnished, Mr. Hume returned to the charge. The accounts had more than borne him out in all particulars. He now again asked if the daily loss ought to be suffered in the financial state the country was in. The Act regulating Savings Banks ought to be repealed, and another passed in its place. His opinion was, decidedly, that Government should just give the interest which it realized by the Savings Bank money, and not add a farthing to it. “At a change in the price of Stock,” added the reformer, “Government might very possibly lose three or four millions, and yet the depositors would not suffer the loss of a penny.” Much as he wished for the progress and advancement of the poorer classes—and few, we think, worked harder to obtain it for them,—he contended that these classes ought to be placed precisely in the same situation as other people who had capital to invest. Another point which Mr. Hume dwelt upon was the surplus money which managers of Savings Banks had in their possession untouched, after paying their depositors all the interest that was allowed them. At that time Mr. Hume stated that the surplus in the Newcastle Savings Bank, after paying the expenses of management, amounted to 4,810l. and in the Exeter and Devon Bank to a still larger sum; and this money which had been paid by Government and saved after the Trustees had given a liberal interest to depositors, was now turned into an invincible argument for some change in the law. Mr. Hume concluded with expressing a hope that Government would bring in a bill to amend the law relating to Savings Banks, or at any rate not throw any obstacles in the way of some private member doing it. The Secretary of the Treasury said, in reply, that Mr. Hume had stated the case fairly and correctly; and that the Chancellor of the Exchequer fully intended during the present session to bring in a bill with which he hoped to satisfy all classes.[37] The vicissitudes of party prevented this high Government functionary from carrying out his laudable, but very impossible design. In a few weeks the Chancellor is on the other side of the House, and another occupies his place. A bill, however, was introduced on the 5th of June, 1828, by Mr. Pallmer, which, supported by the new Administration, was passed through Parliament, and became law in the same year.[38] In introducing this bill, Mr. Pallmer said it was quite obvious that the laws which affected Savings Banks ought to be as clear and as distinct as possible. Savings Banks were now very important institutions, and the welfare of thousands was connected with them. At that time there were no less than five Acts of Parliament regulating Savings Banks, and these Acts, which contained 150 clauses, involved an enormous amount of confusion and perplexity. He would in the place of these five Acts, propose an Act, simple and consolidated, of thirty or forty clauses. He would endeavour to deal with all the questions of interest allowed, surplus money, responsibility of trustees, and to make the necessary restrictions towards carrying on the banks safely. And leave was quickly given to proceed with the bill. Nothing transpired in the passage of the bill through Parliament of much moment: so little hold were questions of this nature supposed to have on the public mind, that it is barely alluded to in the pages of Hansard. It seems never to have occurred to the reporters of the day, that posterity might wish for a detailed account of the steps by which institutions, such as these we are considering, arrived at some important position, and so important indeed as to make every step of that progress interesting after the lapse of years. Two or three little incidents have survived this neglect. Mr. Lewis, for example, during the second reading of the bill, proposed a clause for preventing the National Debt Commissioners from taking more than 20,000,000l. from the Savings Bank Trustees, and ordering that, when that amount had been invested, the funds should be declared full. The answer which Mr. Goulburn, the new Chancellor of the Exchequer, gave to the hon. member was, that he “would take a day or two for consideration, after which he should be able to say better whether such a clause ought, or ought not, to be agreed to.” Two or three days before there had appeared in the Times newspaper a well-written lampoon on the new Ministry, over which, it will be remembered the Duke of Wellington presided as Premier, and one verse ran—

"To rest from toil our Great Untaught,
And soothe the pangs his warlike brain
Must suffer when, unused to thought,
It tries to think, and—tries in vain."

Sir Joseph Yorke embraced the opportunity to compliment the Chancellor, amidst great laughter, on being such a “valuable auxiliary of the 'Great Untaught.' The right hon. gentleman evidently was not one who spoke on the strength of two bottles of wine: his eloquence was certainly not of a fiery description;” and more banter of the like description. Mr. Lewis, however, withdrew his amendment, as did also Mr. Hume, who, when the amount of interest which should be given was discussed, had proposed that, in place of a reduction from 3d. to 2½d. per diem, the interest on deposits should only be at the rate of 2d. per diem. The bill was only further opposed in some trifling particulars and, when finally carried, was ordered to come into operation in the November of the same year. The statute was entitled, “An Act to consolidate and amend the Laws relating to Savings Banks,” and repealed all other Acts previously in force. From this circumstance, the clauses of the bill of 1828 are generally known as the “Governing Statutes” relating to Savings Banks. As the great majority of these clauses are still in force, it will suffice, when we come to give the present Act, to simply mark those which were originally passed in 1828, and so distinguish them from the clauses passed in 1863. We will here give the principal items and arrangements of the new bill. The Act provided that the rules of every Savings Bank should be entered in a book, which book should be deposited with the Clerk of the Peace: the Clerk of the Peace was directed to submit this book to a barrister, who, under the terms of the Act, would be appointed by the National Debt Commissioners.[39] The duty of the barrister would be to certify that the Rules of the proposed bank were strictly according to law, and this certification, after it had been made, was to be laid before the Justices of the Peace in Quarter Sessions, who were empowered under certain circumstances to reject the same, or any part thereof. If admitted, as they most commonly would be, after certification, the Rules became binding on depositors and officers. The interest to be given to depositors, as we have already stated, was reduced by this Act from 4l. 11s. 3d. per cent. per annum, to 3l. 16s. 0-½d. per annum. It was provided that savings of Minors might be invested, and that deposits might be made by married Women. Charitable Societies were again authorized to invest sums not exceeding 100l. per year, or 300l. in the whole. Friendly Societies were also authorized to subscribe any portion of their funds into Savings Banks, but a Friendly Society enrolled after the date of the bill could not invest more than 300l. principal and interest included. Trustees were not to receive from any one depositor more than 30l. in any one year, nor more than 150l. in the whole and, when the deposit and interest amounted to 200l. interest was to cease. Depositors might withdraw their money and again subscribe, providing they did not do it to a greater extent than 30l. in any one year. Deposits might be withdrawn from one Savings Bank and placed in another. Should a depositor die leaving any sum exceeding 50l. the same was not to be paid without probate or letters of administration. Administration bonds for effects under 50l. were exempt from stamp duty. Section nine exacted that no Trustee or Manager should be responsible except for his own wilful neglect or default; and finally, and a matter of considerable importance, the bill provided that once in each year the Trustees of every Savings Bank should make a Return to the National Debt Office, in which a full Financial Statement should be made of the condition of the bank; and a minor clause enacted that depositors should be entitled, on payment of one penny, to a printed copy of this Annual Statement.

For several years after the thorough change which we have just described, the institution of Savings Banks increased and prospered wonderfully; up to the year 1833, we find that no steps were taken, nor agitation of any sort got up, to alter the law with regard to them. In this year, some further changes took place; but if we except a slight modification which was made in the arrangements under which depositors could withdraw their money,—a longer notice being thought necessary,—nothing was done which did not place additional powers in the hands of Trustees.

In April, 1833, Lord Althorp, Chancellor of the Exchequer in the Government of Earl Grey, influenced, by a suggestion of Mr. Woodrow, introduced a bill to grant immediate and deferred annuities through the medium of Savings Banks, and to grant them on so small a scale as to place them within reach of the humblest classes. Something of this sort was undoubtedly required, and the necessity became more and more felt on account of the action of Friendly Societies. The poorer classes, it would seem, had scarcely any means of investing in pensions for their old age: although nearly 5,000 Friendly Societies had up to this time proposed to make some provision of the kind, all but thirty-nine had in 1833 entirely relinquished this class of business. It may be said that Friendly Societies gave up this business because so few availed themselves of the provision that was made. From the very constitution of these societies, however, the poor had little confidence that any one of them would last so long as to give them those benefits in their old age for which they would have to subscribe for a long term of years. Benefit Societies might be broken up at any time by two-thirds of their number; this sort of thing was constantly occurring, generally leaving the oldest members in the lurch. An attempt, to which we have not yet alluded, was made even before Savings Banks were established, to give the industrial classes a chance of providing for their old age, and preventing them from being left destitute of other support than parish pay, or a home in the workhouse. Baron Mazeres, so early as 1773, who published a work on Annuities, succeeded in getting a bill introduced and passed through the House of Commons—though unfortunately it was lost in the House of Lords—which would have made the legislation of 1833 less necessary. Lord Althorp now stated that the object he had in view was simply and solely to benefit the working classes. The lowest sum which could be granted as a Government Annuity was 30l. a-year. He would propose to make the sum 20l. The annuity should not be assignable, or transferable, except in cases of bankruptcy or insolvency; and in the case of the purchaser, either through necessity or choice making default in the annual payments, or dying before the annuity commenced, the whole of the money subscribed should be paid to him or his executors. The tables would be calculated at the rate of 3l. 15s. per cent. and this rate being less than the ordinary Savings Bank rate, would enable the Government to introduce the clause for returning deposits. To no class, it was thought, would these proposals be of more service than to members of Benefit Societies, who would thus be enabled to secure superannuation on Government security, and confine the objects of the society in which they might be members to relief in cases of sickness or death. Lord Althorp calculated that a person at the age of twenty-five, paying six shillings a month as a deposit into the Savings Bank, would be entitled at the age of sixty to an annuity of 20l. a-year. He contended, that, from the calculations which had been made, Government could not lose by these arrangements, and he thought the principal feature of deferred annuities for a small amount, with money returnable in the cases above stated, might be made,—if the working classes would only avail themselves of the measure,—to tend greatly to their worldly comfort and advantage. Mr. Thomas Attwood, the member for Birmingham, who made some remarkable speeches in the House on matters of finance, but especially with regard to Savings Banks, objected not only to this proposal, but to legislation of any sort with regard to them. The money deposited in Savings Banks might as well be put into the country banks, for the average amount of each deposit, he was sure, was over 10l. and 10l. was the minimum sum which country banks would take. He “did not believe in paying so much to keep up such establishments, especially when they were not wanted.” To such lengths will intelligent men go, and to such an extent will they shut their eyes! Mr. Attwood put his views before the House quite mildly in this instance, as compared with subsequent speeches. Mr. Brotherton, a member greatly respected in the House, who had once belonged to the ranks of the people, and who might therefore be supposed better to understand their requirements, felt sure that Savings Banks had been productive of great national good, and could not be too numerous. Mr. Pease, the Quaker member for South Durham, hoped that nothing would be done to induce the working classes to try country banks in preference to Savings Banks. In his own county 700,000l. or 800,000l. had been lost in country banks, and therefore it would be highly dangerous to advise the poor to lodge their money there. Mr. Pease's position, as a large employer of labour, gave his remarks weight, when he trusted that the clause in the bill of 1828, which provided that Accounts of Savings Banks should annually be laid before the Government, would be carried out in its entirety; “there was little hope of Savings Banks turning out uniformly profitable to the industrious classes, except Government maintained a strict superintending control over them.” The Chancellor of the Exchequer said this was done, and in two or three instances since he took office, where the Trustees had neglected to furnish proper returns, the Commissioners had exercised the power which the law gave them, and had closed the banks till the Accounts were sent up.[40] In May the bill was carried through Parliament unaltered, but, as usual, opposed by two or three fractious members. Mr. Thomas Attwood again expressed his disapprobation of Savings Banks; and we allude to his speech with a view solely of enlivening our pages, which may over this ground of legislative enactments be dull to some readers. This gentleman stated his belief on the third reading of the Savings Bank Annuities Bill, that Savings Banks “were instituted by the late Lord Liverpool and his Government, not for the good of the people, but for three different purposes.” The first was to draw capital to London, in order to bolster up the Funds; the second was to give the Government the power of putting their hands into the pockets of the people; and the third, to enable them to scourge the people.[41] On the House showing manifest signs of disapprobation, Mr. Attwood said, “Hon. members might express disapprobation as much as they pleased, and the noble lord (Althorp) might laugh, but he firmly believed that Lord Liverpool's great object in getting up these banks was to get his claw in the people.” Lord Althorp replied with the straightforward understanding, and quiet, manly good sense which always characterized this eminent statesman. He wondered that Mr. Attwood had not imputed to Government another motive, that being, to realize profit by Savings Banks, which he need not say they had scarcely yet done. He might have smiled, but it was entirely on account of the originality of the hon. member's ideas on the subject: seriously, it was astonishing that such arguments should be used by reasoning men. “So far from being an injury to the people, he believed these banks conferred on them the greatest advantages; and so far from affording the Government the means of trampling upon them, they would have an exactly contrary effect.” And there can be no question that Lord Althorp was right. The evident effect of Savings Banks, from their commencement, had been to make people independent; and surely persons of this description would be the very last that any Government would attempt to ill-use. Another member spoke a word for Mr. Attwood: he believed him to have the kindest intentions towards the poor; only, he must add, that he took the strangest way of showing these good intentions, when he strove to prejudice the poor against institutions which were capable of rendering them independent and comfortable sooner than any other organization whatever. Mr. Slaney thought the people showed great good sense in preferring Government security to the allurements of country bankers. As for the member for Birmingham, he ought to be reminded of Franklin's story about the two sacks, where the empty sack fell to the ground, whilst the full sack stood bolt upright. The fuller the sacks, the more likely were the people to be independent, and the less likely were they to be trampled upon. Mr. Slaney was glad to find, that though the crisis of last session had had a bad effect on the deposits of Savings Banks, they were now daily increasing. With this discussion, so far as any record is left, the bill became law.

An act passed in 1835[42] extended the bill for consolidating and amending the law with respect to Savings Banks to Scotland, and of course the bill of 1833, which we have just described, became at the same time applicable to Scotland.

Nothing further was done in the way of legislation for Savings Banks till 1844, so we will close this chapter by referring to another attempt made by Mr. Hume, in 1838, to reduce the interest given to Savings Banks, and to introduce other changes into their organization. And here we cannot forbear to state our belief, that, though many thought very differently at that time, Savings Banks, the working classes, and the country generally, had not a better friend than Mr. Joseph Hume. He saw a lavish expenditure going on in connexion with Savings Banks, and he endeavoured to stop it; with what success remains to be seen. He saw that in consequence of this expenditure, or the inducements which it gave, legislative enactments were openly set at defiance by well-to-do people, who, besides their own deposits, made fraudulent investments in the names of the various members of their families, or their friends; and that the action of the Legislature was in this way an attempt to cultivate good habits amongst one portion of the community, at the expense of promoting bad habits amongst another. Mr. Hume on this occasion reminded the House that he was one of the original founders of Saving Banks, and had always taken a deep interest in them. It was far from him to do anything to interfere with their usefulness in the country, only the country ought not to be put to large and increasing expense over them. He compared the rate of interest given before and after 1828, and now stated that on this latter rate the country lost from ten shillings to fifteen shillings per cent. on the entire amount of deposits. The average annual loss to the public up to the time he was speaking, and from 1818, had been 75,000l. If this money went to the provident poor he would not so much care; but if all was paid to depositors, that might not be the case. Of the 500 Savings Banks in existence in 1837, to whom the Commissioners paid 3l. 16s. 0-½d. per cent. interest, 412 of them paid to the depositors only 3l. 6s. 8d., and 88 of them paid 3l. 8s. leaving of course a large surplus, after every expense had been paid, in the hands of both sets of trustees. Hon. gentlemen might say that this surplus money was required by law to be invested in the Surplus Fund account at the National Debt Office; but the act, in leaving it to the trustees to say what they themselves deemed “surplus,” defeated its own ends, and without doubt had opened a door to fraud. Mr. Hume made a motion that the House at its rising should go into committee on the 9th Geo. IV. c. 93, which fixes the rate of interest to be given, and to permit the Chancellor of the Exchequer to reduce that rate to an equality with that which is received in the public funds. He thoroughly believed that the security afforded by Savings Banks was a matter of far greater importance than the amount of interest which was paid. Mr. Hume then referred to a subject which was made matter for great discussion, and which a committee of the House of Commons treated at great length some years subsequently. This was the power which was supposed to rest with the National Debt Commissioners, of using Savings Bank money for the exigencies of the State; “the dangerous power,” as Mr. Hume characterized it, “to change the money they had in charge from funded to unfunded debt.” He said the Commissioners had paid thirty-five millions sterling from 1817 to 1838, for the purchase of Stock and Exchequer bills, and had received from the sale of Stock and Exchequer bills seventeen millions, leaving more than a similar amount then standing in their names. He urged, “that as the whole of the deposits were by law payable in cash, and that as sums under 10,000l. could be demanded in five days, and even larger sums at fourteen days' notice, the public might in a time of panic, such as they had recently passed through, legally make demands of cash, and so produce a heavy loss to the Government, and greatly inconvenience, if not endanger, public credit.” He gave a recent example, taking five months of the year 1832, when the country was at its greatest height of political ferment. The money transactions of the English Savings Banks in

The Chancellor of the Exchequer, who at the time of which we are speaking was Mr. Spring Rice (the late Lord Monteagle), was quite unwilling to take the course recommended by Mr. Hume. He was sure it would tend to shake the security of the deposits, to which the loss which Mr. Hume had spoken of was a mere trifle. He admitted, however, that if Parliament could have foreseen the extent to which Savings Banks would so soon have arrived, wiser arrangements would undoubtedly have been made. People certainly did not want all the inducements to save their money which it was once thought they did require. Still, he was not for changing the rate; Government paid more than they received as interest, but he declined to argue the matter as a mere money question. Mr. Hume might say that depositors cared more for security than interest, but he (the Chancellor) said, that if they reduced that interest, the depositors would rush to take out their money. Nor did Mr. Rice speak without the book. He produced a paper in which was described the effect of the various commercial and political panics on Savings Banks, and in distinction to this the result of the reduction of the rate of interest in 1828. So far as it went, the Return is conclusive and instructing.[44] In the commercial panic of 1825, the total amount withdrawn was 361,000l.; in the political panic of 1832, 550,000l.; in 1828, when the interest was reduced by 14s. per cent., no less a sum than 1,500,000l. was withdrawn. The Chancellor would not say that under no possible circumstances should a reduction take place; a time might come when it might be done wisely and discreetly, though he believed it would never take place without creating some degree of uncertainty and risk. The depositors in Savings Banks were not the class to be experimented upon, and he would not have it said of him by persons out of doors that he had commenced reductions in the public expenditure by cutting down the interest payable to the poorer classes, who, after all, he believed, were the principal investors in Savings Banks. One other little item of statistics Mr. Rice gave before he sat down, which is very interesting, and much more convincing than his other arguments. He gave, from a Return which we have not been able to find, the amount of interest which had been paid in money since the establishment of Savings Banks and, on the other hand, the interest which had been credited to depositors and made into principal. In the former case it was 286,000l.; in the latter, or interest made principal, it was 9,271,000l. Finally, the Chancellor believed, that to pay depositors interest at the rate of the value of money in the market would be a death-blow to Savings Banks altogether! If Mr. Hume, in his pursuit of economy, tried to enforce it by dividing the House on the subject, his duty would be to resist. Mr. Goulburn, as the spokesman of the Opposition on financial subjects, condemned the proposition as likely to cause distrust amongst all classes connected with Savings Banks. So far from thinking that the interest ought to be reduced, or could be reduced, with safety—and this remark is curious, viewed in the light of subsequent events—“it was only by great care and good management on the part of those who superintended such banks” that expenses could be paid. Time, however, works wonders, and among other things, brings its revenges. The financial reformer, who from the first had the best of the argument, had not long to live to see a change, and to find that change brought about under the direct auspices of one who only six years before, in the words just quoted, had strenuously opposed his motion. We must leave Mr. Goulburn's bill of 1844 to be described in a subsequent chapter.

[28] Mr. Rose's exertions in this respect were only ended by his death, which took place in January, 1818, at the age of seventy-four. “His whole life,” says a contemporary, “was the continued and strenuous effort of a powerful mind to promote the welfare of the state and the happiness of his fellow creatures.” In contrast to this testimony, which cannot be called exaggerated, we might refer to William Cobbett's bitter tirades against Mr. Rose, which, indeed, may with some readers form the most convincing evidence of the merits of the statesman. In Cobbett's “New Year's Gift to Old George Rose,” published in the Register of 1817, and to which choice production we shall again refer, there is an elaborate and embittered attack upon the latter, in the course of which Cobbett stated that the amount of the sinecures which Mr. Rose and his sons held would furnish ample funds for all the Savings Banks then in existence.

[29] From a bare record of the debate in question to be found in Hansard. Third Series. 1816.

[30] Act 57 George III. c. 130.

[31] Hansard's Debates, vol. xli. page 1392.

[32] This cognomen was given to Mr. Duncan more than once in the House of Commons about this period.

[33] A Letter to W. R. K. Douglas, Esq. M.P. on the Expediency of the Bill brought by him into Parliament, occasioned by a Report of the Edinburgh Society for the Suppression of Beggars. By the Rev. Henry Duncan, of Ruthwell. 1819.

[34] 1 George IV. c. 83.

[35] 5 George IV. c. 62.

[36] We shall see subsequently that this loss was more than made up in other ways.

[37] Times, March 13, 1828.

[38] 9 George IV. c. 92.

[39] The barrister appointed, under clause 92, was Mr. John Tidd Pratt, who still holds the office after a lapse of thirty-six years. Under a subsequent clause of the same Act there was power given to the Commissioners to appoint an umpire in cases of dispute, and Mr. Pratt was likewise appointed to decide in these cases on behalf of the Government. Mr. Pratt's name is now properly and deservedly connected with all questions relating to Savings Banks. From time to time this gentleman's intimate acquaintance with the legal history and working of these and kindred societies has gained him other appointments in connexion with them. By the Act of 7 & 8 Victoria, c. 83, he had additional powers conferred upon him, this Act setting forth that all cases of dispute should be referred to him in the first instance, without the necessity of each party appointing an arbitrator. In 1846, under the 9 & 10 Vict., he obtained the appointment of Registrar of Friendly Societies, an office which he still holds; and in 1861, on the establishment of Postal Banks, he was appointed Consulting Barrister. Mr. Pratt was born in 1798, and called in 1824 to the bar at the Inner Temple.

[40] Times, April 17, 1833.

[41] Hansard, vol. XVII. Third Series. 1833.

[42] 5 & 6 William IV. cap. 57.

[43] The Westminster Review of this period thus refers to Mr. Hume's motion for a reduction of interest rate for Savings Banks: “We are ignorant of any good reason why the public should receive these deposits on other terms than those which would be settled between individual and individual in a common mercantile transaction. Admitting to the full importance of giving encouragement to economical habits, we deny that the payment of bounties is necessary for such a purpose, or that more is requisite than to extend to the parties that superior accommodation and greater security for investment which it is in the power of Government to afford. This should form an inducement adequate to every salutary purpose. All that is given as interest beyond the market price of money is simply a premium upon fraud.” Vol. IX. Old Series.

[44] But it did not go far enough; the years 1826 and 1831 are the years which ought to have been taken.

CHAPTER IV.

ON THE PROGRESS OF SAVINGS BANKS UP TO THE YEAR 1844.

“They to whom this subject is indifferent may censure our minuteness; but those who, like us, regard the establishment of Savings Banks as marking an era in political economy, and as intimately connected with the external comfort and moral improvement of mankind, will be gratified to trace the rise and progress of one of the simplest and most efficient plans which has ever been devised for effecting these invaluable purposes.”—Quarterly Review. 1816.

Arrived at the year 1841, when Savings Banks have had a legislative existence for a quarter of a century, it may be well to stop and pass the period in review; to endeavour to show the progress made by these institutions during this time; and to exhibit, so far as we are able, their effect upon the general progress of the country. We have up to this point dealt principally with the legislation on Savings Banks, and have taken little account of what was said or done with respect to them out of Parliament, after the year 1817. At this early period there were frequent and warm discussions out of the House as to their value and utility. When they first began to attract public attention, “the friends of the working classes” were nearly equally divided between their advocacy of them and the Friendly Societies. When Mr. Rose, who had strongly advocated the formation of these societies, saw the benefit that Saving Banks were calculated to render to the poorer classes, he cordially took up their advocacy; and although he urged that there was scope enough for all societies which inculcated the duty and practice of providence and frugality, he was loudly accused of leaving his first love, and advocating the Savings Bank plan for some political purpose. We cannot give the reader a better idea of the way the industrial classes were beguiled, and the kind of influence which was only too often brought to bear upon them at this period, than by giving some extracts from a paper to which we have previously incidentally referred. In his “New Year's Gift to old George Rose,” Cobbett reminds Mr. Rose, that after all he had done for them, he had at length “left Friendly Societies in the lurch, and taken to the bubble of Savings Banks.” Cobbett, however, said that he could see through the change, and he shows the amount of his penetration by such argument as the following:—In “friendly societies Mr. Rose found that 'the members got drunk and talked—the naughty rogues.' Yes, and even politics too! And it might have been added,” continues the writer and proprietor of the Register, “that they very frequently heard one of their number read—the Register!” The object of Savings Banks, or at any rate, parliamentary interference with them, was nothing else, Cobbett considered, “than to get the pennies of the poor together, but to keep their owners asunder.” “What a bubble!” repeats Cobbett. Then addressing Mr. Rose in the first person, he tells him how, in his opinion, “the company of projectors who, in the reign of George the First, wanted a charter granted to them for the purpose of making deal boards out of sawdust, just saves you from the imputation of having, in the Savings Bank scheme, been the patron of the most ridiculous project that ever entered into the mind of man.” Another person of Mr. Cobbett's stamp, though one who aspired to greater knowledge of all questions connected with trade and currency, and who really paid closer attention to such subjects, was Mr. Thomas Attwood—“Currency Attwood,” or “Little Shilling Attwood,” as he was variously designated in some parts of the country. Whenever he could get an opportunity in Parliament to speak of Savings Banks, we have seen that he invariably clothed his ideas in a vocabulary of prejudiced invective. And he repeated himself outside the walls of the House whenever he had the chance. “Savings Banks,” we find him saying on one occasion, “besides costing the nation so much, were a nuisance;” “Savings Banks were a sort of screw in the hands of the Government to fix down the working classes to the system.” On these expressions, and others of a like tendency, as texts, those minor demagogues who went “on stump,” preached for many a day. Considering how such men treated the institution of Savings Banks, it is wonderful that they progressed as they did. That they kept many from using these institutions is beyond a doubt. Such men had a surprising power over the labouring classes, and though that power was often used for good, too often it only excited distrust and apprehension when distrust and fear were least needed and most dangerous. The true friends of the poor—and there have been many such at all times—said, in effect, “We have reason to believe that much money now spent unnecessarily might be saved for seasons of want and old age, if the poor had the means offered them of putting that money by easily, safely, and profitably. We have exerted ourselves to get such places established, we give our best exertions to have them conducted properly, and we advise all who have money to spare to intrust it to this safe keeping.” Cobbett, on the other hand, put his printers to work to say “What a bubble! At a time when it is notorious that one half of the whole nation are in a state little short of actual starvation—when it is notorious that hundreds of thousands of families do not know when they rise where they are to find a meal during the day—when of the far greater part of the whole people much more than half of them are paupers; at such a time, to bring forth a project for collecting the savings (!) of journeymen and labourers in order to be lent to Government, and to form a fund for the support of the lenders in sickness and old age!”[45] It would be idle to show the fallacy of such reasoning, even admitting the facts of the case to be as they are here stated. Suffice it to say, that in this way did such men pander to the prejudices of the uneducated. Many thousands of industrious workmen who had had no training, and who could not discriminate between real and imaginary evils, were thus too often flattered into believing that they had more than their share of the truth, honesty, and manliness of the age on their side, and that the upper classes were against them on every side and in all respects. All this is pretty well over now.[46] Just as the sun expels the mists of the morning, so have education and a free press opened the eyes of the people to their true interests, and shown them which class of men have most wished for and best worked to promote these interests.

It was not, however, only by such men as Cobbett that Savings Banks were misinterpreted and misrepresented. Like every other new and untried measure, it had to run the gauntlet of an educated as well as an ignorant opposition. It was a very usual thing to find the discussion on the utility of Savings Banks waxing warm in the most important organs of public opinion. For example, the Times newspaper early took a decided stand against Savings Banks, and tried to maintain its position, as we shall see more fully subsequently, long after the country had given them a pretty unanimous verdict of approval. Just after the period of which we are speaking, a correspondent in the then, as now, leading journal, thought himself able to trace in Savings Banks, “a great source of mischief; and that to them,”—though in what manner it is not attempted to be proved,—“may be attributed a considerable portion of the distress which has been so long felt, and which does not appear to diminish in most of the manufacturing districts.” “God forbid,” ejaculates this remarkable genius, “that I should desire to encourage improvidence amongst any portion of society; but there is a wide distinction between parsimony and extravagance, and these banks have literally made misers, and held out a bonus for them to become so.” But even this is not all: the same spirit, says our authority, which actuates a man in becoming a miser, will operate to prevent their making use of their petty accumulations. “With the habit of parsimony the mind becomes degraded, and the workhouse or an application to the dispensers of parochial relief lose their horrors.” It is almost useless, seeing that now few could be found to advocate such views, to reply to them. They are based on the assumption, which we take to be utterly erroneous, that a poor man is less at liberty to lay out his mite at interest than his richer neighbour; or that if he did so, the step was more likely to lead to his becoming a miser than his wealthier neighbour who had all his money in the funds. It is less necessary to argue the point, inasmuch as the aim of this nonsense is made quite apparent by the writer concluding with an elaborate eulogium on Benefit Societies for working men. “They could there, provide,” says he, “at a very trifling expense, against sickness, want of employment, and numerous other casualties; while, on the other hand, there would be no need to deprive themselves of the common necessaries of life in order to add to their hoard.” But here again the fallacy of the argument is clearly apparent. The allowance from a Benefit Society, then as now, in case of sickness or distress, would be, generally speaking, quite inadequate to the circumstances requiring it; and how could it possibly be more likely that a person in this situation would be more independent of parochial relief than one who had a fund of his own to look to, or perhaps a livelihood at his command. Such warfare as this went on uninterruptedly for several years; the advocates of Benefit Societies running down Savings Banks, and vice versá, not in all cases seeing that the two might exist together, and that each was well calculated to supply a want which the one or the other class of institutions did not meet. There can be no doubt, however, which institution suffered most from these discussions. The most decisive proof of the improvement which was seen in the condition and the habits of the labouring classes during the first quarter of the century was the progress of Benefit Societies from 1802 to 1820. In the former year there were 9,622 of these societies; in the latter year there were nearly five times that number. The people during this period had not improved in comforts and conveniences as they did subsequently; they progressed in the more skilful use of the same, or even diminished means. These societies made a deep impression upon the population, and in the same proportion the people were recovered from the control of their appetites and passions, and from that propensity to use without restraint those means of immediate gratification which distinguishes all ignorant people of whatever rank. Notwithstanding all this, the Friendly Societies were beset with difficulties, and in the discussions to which we have alluded their opponents made the most of them. Perhaps the well-meaning might better have assisted the poor in instructing them how to reform the management of these societies, and by showing them the principles upon which they could be most safely established. However it was, there can be no question that, either from their inherent defects or the comparison of the benefits to be derived from the one as against the other institution, Savings Banks soon took the place of Benefit Societies in the public estimation, and progressed when, comparatively speaking, the latter declined. In the evidence given by Mr. Lloyd, the founder of the Hertford “Sunday Bank,” before the committee on the Poor Law previously referred to, he assigned as one of the causes which had promoted the success of Savings Banks the evils arising from Benefit Clubs or Friendly Societies, as then constituted. “There is always,” he said, “a regulation, that when two-thirds of the members choose to assemble and agree to break up the club, they can; the consequence is, that the other one-third, the old members, who ought to be deriving an assistance during the last period of their lives from these clubs, are deprived of it.” He had known six clubs which had been broken up in this way. The following extract from a report of a committee which was appointed to investigate the rival claims of Benefit Societies and Savings Banks so admirably sums up the whole argument, and says so much with reference to both institutions which is no less true now than then, that we feel confident our readers will not object to have it reproduced here.[47] “Benefit Societies have done much good; but they are attended with some disadvantages. In particular, the frequent meetings of the members occasion the loss of much time, and frequently of a good deal of money spent in entertainments.[48] The stated payments must be regularly made; otherwise, after a certain time, the member loses the benefit of all that he has formerly paid. Nothing more than the stated payments can be made, however easily the member might be able at the moment to add a little to his store. Frequently the value of the chances on which the societies are formed, is ill calculated; in which case, either the contributors do not receive an equivalent for their payments, or too large an allowance is given at first, which brings on the bankruptcy of the institution. Frequently the sums are embezzled by artful men, who, by imposing on the inexperience of the members, get themselves elected into offices of trust. The benefit is distant and contingent; each member not having benefit from his contributions in every case, but only in the case of his falling into the situations of distress provided for by the society. And the whole concern is so complicated, that many have hesitation in embarking in it their hard-earned savings. With such disadvantages who would not rather choose the simple, secure mode of investment offered by the bank—free (as the banks were at that time) from them all? But if they must have the Benefit Society, with its contingent and distant benefits, working men should not rest here. Thousands of the working classes could well afford to pay their weekly sums to secure their sick and burial money, and yet have enough to spare to provide against the other rainy days of their life. A poor man's savings are continually liable, while in his own custody, not simply to professional thieves, but also—and there is far more danger of it—to be pilfered by himself and his family. They are often lost by being intrusted to improper hands; they are still oftener worse than lost in the ale-house or the gin-palace, and the money which properly taken care of might give the means for occasional enjoyments of a harmless kind, providing for the legitimate wants of his children, or which might support all during the intermissions of employment to which all are exposed, may be worse than squandered.”

It was thus that the institution of Savings Banks lost, by being cried down by the leaders of the people, and by the discussion which continued as to their merits; and thus that they gained, by a close comparison with the kindred institution of Friendly Societies. The loss, however, was but temporary. In ten years from the date of their legal formation the deposits in Savings Banks amounted to upwards of sixteen millions sterling, and this sum had been contributed by no fewer than four hundred thousand persons. A writer of the period characterizes the progress made by institutions such as these “as one of the most striking manifestations of virtue that ever was made by any people;” and he seems to have had some good grounds for the opinion. “For persons merged in poverty and totally deprived of education, as the English population have heretofore so generally been, it is not easy or common to have much of foresight, or much of that self-command which is necessary to draw upon the gratifications of the present for those of a future day.” And though, as we have previously seen, the money here deposited could not have been put there by persons exclusively of the industrial class, yet it is clear that many of the labouring community did possess means beyond what were needed to procure them the necessaries of life, and that these institutions exactly met the want which was felt in not having the means to safely dispose of that little surplus, and to call it in when the need arose for it. The year 1827 was the year, it will be remembered, after one of the most terrible financial crises that this country has ever passed through, and yet, though the average amount of money deposited in Savings Banks in one year before this time had only been about 1,100,000l., no less a sum than 859,734l. was deposited in 1827, and not half of that sum was withdrawn. These facts show the great hold which Savings Banks had already taken upon the country. Of what service they were during such times as those witnessed in 1826 we shall have to speak. We are far from anxious to trouble the reader with any statistical information which might easily be withheld, but the progress of which we are now speaking can be best traced by presenting first, a tabular view, which gives that progress from year to year, and which will likewise furnish material for remark.[49]

TABLE 1.

Showing the Amounts invested by Savings Banks with the National Debt Commissioners from 1817 to 1841, with the Total Capital of all the Banks at the end of each year:—

Remembering that this table does not give the actual business done by Savings Banks within this period,—which, indeed, from the absence of proper returns in the earlier years of those Banks it would be difficult to present,—many instructive lessons may be gathered from it as to their value and utility. In fact, however, and for all practical purposes, the amounts remitted by the Trustees to the National Debt Office very fully represents the progress of Savings Banks, for they may be considered as representing so much surplus every year, after all the claims on the banks had been met. The variations observable in the returns are accounted for quite easily by the state of the country at the time. When the amount falls, it may be taken for granted that the country is passing through a period of exceptional suffering and trial, and that the funds which have been patiently accumulated for times of need are thus made available when the necessity arises for it. The country was unusually prosperous, for example, in 1823-4, and an enormous surplus was returned. In 1825, as if to mark the coming storm, there is a heavy fall in deposits. In 1826, the tables were turned, not only in a figurative, but, so far as we are concerned, in a literal sense. The circumstance can be only too well explained. The Quarterly Review of that time gives a glowing account of the increased wealth of all classes, especially those of the trading community.[50] “The increased wealth of the middle classes is so obvious, that we can neither walk the fields, visit the shops, nor examine the workshops and storehouses, without being deeply impressed with the changes which a few years have produced. In the agricultural districts we do not, indeed, see such great strides, but we see universal advancement.” Then we have the familiar record of the exportation of gold; of the Bank of England and provincial banks deluging the country with notes.[51] Money became so abundant that a terrible rage for speculation set in; joint-stock companies with unlimited liability were projected for every imaginable object. On the reorganization of the South American republics, which had just then been effected, all sorts of proposals for mines were started; the El Dorado had to be found now, if ever.[52] In the session of 1825, 438 petitions for private bills were presented, and 286 private acts were passed. The King, even, was so deceived by the general appearance of things, or was so purposely blind to their real state, as to congratulate the country, in July, 1825, on “the prosperity everywhere pervading the country.” The time arrives when anxious speculators begin to look out for some return for their money; they are told that their capital cannot possibly realize so soon; then the bankers are besieged, but, tempted by the abundance of money, they had discounted bills at long dates to an enormous extent, and lent money upon securities which were presently seen to be almost worthless. Then came the panic,—and then the crash. Commercial houses first failed, big, substantial firms, which were supposed to have the wealth of Crœsus at their back, came down thunderingly. “Many a firm of unimpeachable honour and unquestionable solvency was compelled to bend before the storm.” Then came the turn of the great banks: they had advanced their money to the merchants, and now that the security had failed, they also must bend before the blast. On the 5th of December, the news spread with the wings of the wind, that the banking house of Sir Peter Cole and Co. had failed; next day, Williams and Co. stopped payment; and from that time, without intermission, seventy country banks went down within six weeks.[53] How things were restored to their original condition, and how promptly the Government acted during the terrible panic, we need not stay to tell. Savings Bank deposits fell from about three millions in 1825, to less than half that sum in 1826. More money was withdrawn in the year of the panic than had been withdrawn altogether since the year 1820. It is not a little curious, as showing that depositors in Savings Banks are less inclined to speculation than other classes, to point out, that during the panic a sum equal to at least fourteen millions sterling must have been safely lodged in the different provident banks of the country; and that little money was hazarded in the speculations of the time is evident from the fact that only one-tenth part of the whole amount of deposits was withdrawn to supply emergencies. In this way were those people rewarded who preferred a safe deposit with a reasonable interest to “cent. per cent.” and unlimited risk.

Nor can we stop to describe the result of the panic on the industrial classes. The picture of that terrible time has often been drawn, when thousands of hungry, infuriated men, roused by the sorest distresses, went about robbing shops, breaking machinery, rick-burning, chased by the constabulary, and fired upon by the soldiery. The time was a most disastrous one, but it was full of lessons for all classes. Many of the provident poor suffered little, and never had anything to fear, on account of having prepared themselves for such calamities. Those of the poor who acted less wisely, and ventured their little surplus in some speculation or other, met with few condolences. When a portion of them petitioned the House of Commons for relief, they were rather roughly told that they ought to have deposited their earnings in Savings Banks. It was on this occasion that Sir Robert Peel replied to this taunting, and recognised the imperfections of the existing machinery, by asking, indignantly, how the House could expect this to be done in cases where “the Savings Bank was perhaps twenty miles from the working man's home.”

To return again to the table. In 1827 and 1828 the accounts show a much more healthy state of things, and it is clear that the deposits are steadily gaining their natural ascendancy over the withdrawals, when there is another rebound, of a greater magnitude than ever; the withdrawals not only exceeded the deposits of 1829, but the deposits of 1830 added thereto. There can be no question that, primarily, the Savings Bank Act of 1828, which came into operation on the November of that year, and under which the amount of interest allowed on deposits was reduced by 14s. per cent., was the cause of this exceptional and most important change. Like all misfortunes of this nature, it had its bright side, and was far from being an unmixed evil. As we have already endeavoured to show, a large number of depositors up to this period belonged to classes much above the artisan class; and as the former looked more to the interest given, while the industrious classes thought most of the security offered, it is no wonder and no calamity that the connexion which the higher classes had formed with Savings Banks was now dissolved. Henceforth, the returns may be looked upon as more than ever the result of habits of economy and thrift, and as representing the surplus money of the artisan and the lower portions of the middle classes.

The year 1830 shows that confidence was slowly returning, when again there is a period of great depression. Two millions of capital is withdrawn in 1831-2, over and above the deposits of those years, to meet demands on the banks. The political agitation of those years sufficiently accounts for this state of things. It will require little to be said in order to show that a time like that was likely to tell largely against such institutions as those under consideration. The time was one of great anxiety among all classes, and amidst the uncertainties and anticipations which followed in rapid succession, it would be only bold people, and those of more than average intelligence and power of mind, that could confide, without the smallest degree of wavering, in the stability of the country. We had a turbulent population at home, and amidst much agitation for their undoubted political rights, there were many clamouring for bread, many clamouring for work, and thousands for they knew not what: and France offered an illustration of what might possibly happen. With such manifest agitation everywhere, with funds falling, and the entire political sky lowering, there cannot be much wonder that many waited patiently for some issue before they trusted to resources other than their own. Not only were actual hardships endured during this great crisis in our history, but the working classes brought hardships upon themselves. Led by intemperate and impracticable men, many thousands of the more ignorant beguiled themselves into believing that the Reform Bill would do everything for them, and they would need to do nothing; that every man would be forced into independence and competence whether he would or no; that taxes would be repealed; and that in this new state of society there would no longer be any need of that spirit of striving which is at the bottom of all true schemes of social progress and advancement. This period over, many illusions were dispelled, many useful lessons learnt. Under somewhat fairer and happier auspices, society settled down into its old ruts again, only too thankful in many cases that the old ways were still open. After the year 1832, the progress of Savings Banks continued to be eminently satisfactory. There was a transitory cloud in 1837, and another in 1839, caused by exceptionally hard times, such as a bad harvest and scarcity of food, and distress in the manufacturing districts caused by unusual reverses in trade, when again the funds laid by came opportunely in aid; but, with these exceptions, the Returns furnish no further grounds for remark. We will therefore proceed to give a small table, which, without giving the details of each year, shows in a clear light the progress made by the banks at the expiration of three quinquennial periods.

TABLE 2.

From 1825 to 1840.

Taking the year 1841, on account of the facilities for calculation afforded by the census of that year, we find that up to the 20th of November, 1841, the total number of Savings Banks in the United Kingdom was 555, of which 428 were in England, 23 in Wales, 76 in Ireland, and 28 in Scotland. The smallness of the number of Scotch banks is accounted for by the popular character of the private banks, and the fact that until within six years of the period we have reached, or 1835, none of the acts relating to Savings Banks had any reference to Scotland. The average amount of each deposit in 1841 was—in England about 30l.; in Ireland 29l.; and in Scotland 12l. The total number of depositors in England as compared with the population of 1841, was one to every 22 inhabitants, in Wales 1 in 58, in Scotland 1 in 52, and in Ireland 1 in 103.

One of the most positive proofs of the increase in the provident habits of the people between 1828 and 1844 is to be found in the increase of the number of small depositors. In 1828 the number of depositors in Savings Banks who had not subscribed more than 20l. was 203,604. In 1844 they had increased to 564,642, or nearly three times the number.[54] The amount of the deposits in the first instance was 1,473,389l.; in 1844 it reached 3,654,799l. One writer, overlooking the fact that the increase here spoken of was a gradual one year by year, has endeavoured to trace the effect of the decrease in the amount of large deposits and the increase of the number of small ones to the operations of the Act for the Amendment of the Poor Law in 1834. There can be no question that this act supplied motives for economy, and operated in increasing the number of provident people; but in view of the fact that the increase in the number of depositors between 1833 and 1834 was exactly in proportion to the increase between 1834 and 1835 or 1835 and 1836, it is quite as proper, and we submit more so, to speak of Savings Banks operating beneficially upon the Poor Law, as that the Poor Law Amendment Act increased in this way the efficiency of Savings Banks.[55]

What assistance these Savings Banks must have rendered during the crises through which the people passed between 1817 and 1841 may be judged by the use made of them. But we think we see more in Savings Banks than that they enabled many in times of hardship by a wise foresight to escape much that others suffered. We see in the progress of these banks undoubted evidence of the increasing prosperity of the country, in relation at any rate to the poorer classes; and they were among the direct agents in creating that prosperity. Savings Banks created and then fostered habits of economy and frugality, and every man won over to the pursuit and practice of these habits increased the sum of the prosperity manifest during the period we are considering. Perhaps we can make the position we here take up more clear from the following table,[56] carefully compiled from the best sources of information on such subjects, and which we think is calculated to show the good influence of Savings Banks in a somewhat new and striking light.

TABLE 3.

Showing the Increase in the Deposits of the Savings Banks in each English[57] county, between 1834 and 1841, and the Decrease in the Poor Rates during the same period:—

In every county, as may be seen from this table, there is a decided increase in the number and amount of Savings Banks deposits between the two periods; and in every instance, except two, there is a decided decrease in the amount spent on the relief of the poor. Not only so, but taking the two exceptional cases, we find that in the one case, a small county, there had not up to this time been any Savings Bank established; and in the other instance, that of the large and populous county of Lancaster,—which shows an increase instead of a diminution on the two years in the amount of poor relief,—it is not less curious that its industrial population have never patronised the Savings Banks to the same extent, in proportion to their number and earnings, as the same classes have done in the country generally. Further, the three counties of Kent, Middlesex, and Norfolk, which in 1841 had the greatest number of depositors in Savings Banks in proportion to their population, also exhibit the pleasing fact of the greatest diminution in the amount spent in the relief of the poor. It may be said that many considerations ought to enter into such calculations as those we are making, and that at best such statistics only prove that the same causes, such as abundance of work, good harvests, &c., will contribute to the increase of surplus funds, and the decrease in measures of relief. But it must be borne in mind that prosperous trade does not necessarily produce frugal people and provident habits, though it often enough leads to unnecessary and vicious expenditure. By far the greater part of the decrease in the sums given for relief is unquestionably owing to the operations of the Poor Law Amendment Bill already referred to, which Lord Althorp carried through Parliament. Truly stigmatized before his time as “the great political gangrene of England,” the old Poor Laws of this country first made paupers, and then promptly maintained them. It is, however, the relative proportion in which the increase of Savings Bank deposits stood to the decrease of the sums for relief that we wish here to impress upon the reader, leaving him to form his own conclusions. And with all respect to those who framed the measure of 1834, which was very beneficial to the country and only just to the independent poor, we think the results have been rather too much magnified. From the year 1820 we can plainly trace a manifest improvement in the condition of the poor, and we have not scrupled to ask for a place for the Saving Bank system among those important agencies which have led to this improvement. Still, taking the measures of Poor Law relief as a good criterion of their condition, we find that the sum total paid for the ten years between 1811 and 1821 was 68,000,000l., giving a yearly average of 6,800,000l. In the ten years ending 1832, the amount of poor rates was 62,900,000l., or a yearly average of about 6,200,000l. Thus we have, in spite of what was considered the iniquitous system of relief, and in spite of an increase of population amounting to 16 per cent., a clear reduction of 5,000,000l. within ten years. The advancement is still more clear, if we take the case of the large centres of population, but this is perhaps, unnecessary.

The Returns, however, of the Registrar General may be supplemented by Revenue Returns for the same period, from which the improvement in the condition of the industrial classes may be made still more palpable. In 1814 the consumption of tobacco was 15,000,000 lbs.; in 1832 it had increased to 20,000,000 lbs., an augmentation of 31 per cent., while the population only showed an increase of 24 per cent. during the same interval. The amount expended upon articles which, like tobacco and intoxicating drinks, are not, to say the least, of the first necessity, forms no incorrect measure of the progress of the nation, and of the ability of the people to bear the national burdens which must be imposed. In 1814 the consumption of sugar was 1,997,000 lbs.; in 1832 it amounted to 3,655,000 lbs., an increase of 83 per cent. to be set against the above rate of increase in the population. The tea consumed in 1814 was 19,224,000 lbs.; in 1832 it had increased to 31,568,000 lbs., or an increase of 65 per cent.; and coffee increased from 6,324,000 in 1814 to 22,952,000 lbs., or an increase of 183 per cent., in 1832. The increased consumption of such articles, (not forgetting reductions in price,) was an evidence of nothing, if not of the growing prosperity of the people. Such items show that the people, as a mass, enjoyed a greater command over the comforts of life than formerly. The rich man, of course, added little or nothing to his ordinary consumption of the articles that were necessary to his comfort or convenience, but with the poor it was very different. For example, the amount of silk imported during the period of which we have spoken varied but little, while the imports on the article of cotton wool, the staple fibre of the masses, increased from 152,000,000 lbs. in 1820 to 259,000,000 lbs. in 1832, or an increase of 70 per cent.[58]

Enough has been said, we hope, to show the gradual progress made in these years in all that relates to the social advancement and well-being of the people, and to what extent Savings Banks played a part on that advancement. Because these institutions have been proved to create frugal habits—in much the same way that the supply of intoxicating drinks creates in many cases a demand for them—as well as to give them direction and encouragement, we have endeavoured to prove their right to a foremost place among the many other mighty engines of civilization which have made Great Britain what it is. And now we must conclude this chapter with a less pleasant task, and refer briefly, at present, to two foes to Savings Banks, one without and one within, both of which had a very powerful effect as hindrances on the progress of these useful institutions. We refer to the doubts which began to be cast on the utility of Savings Banks by portions of the public press, and the serious frauds which now for the first time began to engage public attention. In 1844, when Mr. Goulburn's bill was under discussion and subsequently to that, several newspapers began to dispute that Savings Banks were either so useful or so wise as had been generally thought up to that period. The Times newspaper, with an hostility which Dr. Chalmers characterized as “most glaring” and “likely to mislead every artisan from the path of his true interests,” laughed at and ridiculed the system long after it had proved its usefulness in numerous ways. That paper, which opposed the new Poor Law of 1834 with great bitterness, and had treated with manifest injustice other schemes for the social amelioration of the poor, devoted several editorial articles in 1844 to throw discredit on the institution of Savings Banks. The articles in question were calculated to work a mischievous practical influence on many readers, especially on those who gave little attention to the subject of political economy; they were meant to create a spirit of opposition to Savings Banks, but in many cases they must have had the opposite effect and failed to convince all who were not equally perverse. To show the kind of argument indulged in by the leading journal at a time when it was equally as now the greatest newspaper power in the land, when its rebuke or praise had a weighty effect on any important measure, and when Cabinet Councils debated whether it should be propitiated or defied,[59] we need only give the following extracts:—

“A labourer sixty years of age has, by hook or crook, saved 500l. We know such a case. The 500l. is the plague of his life. It would be a mercy to swindle him out of it, except that he would probably feel a good deal at the loss. Could he forget it, he would be both a happier and better man. To begin with, it is a guilty possession. His father is maintained by a distant Union; his sons and daughters are all but forbidden his cottage. He invests it in secret.... When he dies his children will squander it, not in dissipation, but in the mere feebleness and incontinence of ingrained poverty.”

Another extract striking at the root of all habits of providence and thrift:—

“When a labourer has saved 50l. or 100l. then the greatest difficulty comes: what is he to do with his money? He has caught a tartar. His usual course is a very natural one, because it is the first course that offers—to open a public house. He does so, and generally and happily loses his money. A labourer with 200l. in his pocket has a very fair prospect of the union workhouse before him. He is not commercial enough to open a shop, and small farms are obsolete. He may, to be sure, shut his doors against all his kith and kin, and buy a selfish annuity with the sum, which will just keep him while he rots and dies. But will he, and who is to advise him to do so?”

Granted that things are very different now to what they were when these remarks were penned, and that investments of any sort may now be made with comparative ease, it seems to us that the argument of the Times was based throughout on false assumptions; that it is a mistake to suppose that the primary or sole object of Savings Banks was to build up capitals for investiture in business or trade, and not for expenditure on the necessaries or comforts of life; nor to make every labourer a capitalist, in the usual acceptation of that term, but to enable him to end his days in some sort of independence, and in some degree of peace and comfort. Savings Banks at their establishment were, always have been, and still are, meant for accumulations, not to be traded with,—though, of course, there is no prohibition,—but always have had and still have a homelier aim. They are meant to inculcate the habit of laying by for an evil day, for old age, the winter of life, or as Dr. Chalmers, we believe, strikingly puts it, “for those mishaps and sicknesses which might be termed its days of foul weather.” In such case the money will not be traded with, but in right season spent. The answers to some of the arguments of the Times are indeed so obvious that it seems superfluous even to state them. Money in hand is all the world over better than beggary. That the inculcation of such a principle will tend to fill our towns with paupers is monstrous absurdity. The object and design of Savings Banks are, of course, primarily, to seek to get hold of the surplusage of money in the hands of the poorer classes, to rescue it from vicious or unnecessary expenditure at the best seasons, in order to its forming a reserve for needful subsistence or additional comfort at another period. “A domestic servant,” says another article of the Times,[60] “at the age of fifty-five or sixty, finds she is incapable of further employment. She has saved 80l. Very creditable to her, of course, and very stingy she must have been to her nephews and nieces to have done so much. But what is she to do with her 80l.?... Across the Channel such a sum would be a mine of agricultural wealth. On this side the Channel it would be a snowball in the sun.” This is, by the way, an extreme and unfortunate case, and one we would hope not often, in all the particulars, occurring. But were it frequent, surely 80l. in hand is better than nothing and an immediate resort to the parish. To say that the 80l. would always remain 80l. and would not melt away like snow before the sun, would be ridiculous; but if there be any virtue in self-reliance, and in self-dependence, it surely would not be ridiculous to say that that which enabled a woman to minister to her own wants in a greater or less degree, and in the same degree to rescue herself from becoming a burden upon other people, was, so far as it went, a solace and a blessing to her. Once, and only once more, the Times declared that “investing money in Savings Banks was mere hoarding,” nothing more than the creating of misers.

“It is most melancholy to notice the few helps and encouragements to thrift and husbandry which our present condition allows the labourer. We tell him to save. We put it as the most indispensable moral duty; the great commandment of our law. We build prisons (sic) for those whom age or calamity have proved transgressors against it; yet, having laid this heavy burden upon the labourer, where is the 'little finger' of help contributed by society. We refer him to the Savings Banks and to Friendly Societies, i.e. we tell him to hoard his money, or to secure an annuity, on the chance of old age. There cannot be two modes of investment less interesting, less social, less suited to the condition of the mind of a labourer. Where it is practised, we can only say that it is an act of faith and prudence so dry, so pure, so transcendental, as to be above humanity, especially that very form of humanity found in the English agricultural labourer.”

Here we think both arguments and facts are at fault. There can be no question that at this time there were many almost insuperable obstacles to the profitable investment of small sums. These obstacles, caused by the state of society and the tendency of legislation, especially on the distribution of land, have since been removed, and no longer influence the case. Why, however, the best should not be made of existing means is at least a fair question? People must save money—hoard it, if the term he liked better—before it can be used. It may be uninteresting and unsocial to save money instead of spending it, but people must do either the one thing or the other; and if they do the former, they at least know the value of a secure place of deposit where their money shall lie in safe and remunerative custody till it be needed. Then as to the facts. “The acts of faith and prudence,” “so dry, so transcendental, &c.,” were at that time, as at present, more frequent where the agricultural labourer is in strongest force than in almost any other part of the kingdom. In Dorsetshire—“poverty-stricken Dorsetshire,” as it is called by the Times itself—the Savings Banks return for 1843 averaged more than 2l. a head for the entire population, while in Lancashire, with its highly-paid manufacturing population, it only averaged 1l. Nor is this a solitary instance. The rural population throughout the country are by no means the least frequent visitors to Savings Banks.[61]

Far more important, however, in their disastrous results than those attacks from without, were the blows levelled at Savings Banks from within. There were now developed inside these institutions seeds of much mischief, which materially retarded the growth of Savings Banks in subsequent years, if not of the habits which the promoters of Savings Banks sought to engender and foster. The subject of Savings Bank frauds will belong to a subsequent chapter; but as one or two cases occurred during the time treated of here, and had their influence on subsequent legislation, we have considered it advisable to dispose of them before proceeding to describe the legislation of the last twenty years.

It was seen from the commencement of Savings Bank operations that the first and most imperative element should be complete and unquestionable security. When Government undertook to legislate for Savings Banks it did so with a view to their protection from those frauds which must necessarily overtake some of a great number of semi-private undertakings. In 1817 the Banks were rapidly increasing in number and importance, and it was only natural to suppose and assume that abuses would creep into the management. To meet the probability of a misapplication of the funds, Government agreed to take all the money deposited with the trustees of Savings Banks, and to guarantee a certain fixed rate of interest for it, even above that which the fund directly obtained for itself. This was at once an encouragement to the frugal and a perfect security for such sums as were paid to the National Debt Commissioners. In the interval, however, between the payment of the sums by the depositors and the second payment by the trustees, no safeguard was provided beyond the vigilance of the same voluntary and unpaid trustees. Those trustees were completely irresponsible after the year 1828. Before that time we can only assume their responsibility, not from the ordinary reading of the enactment, but from a decision which was given in a court of law. That decision was to the effect “that deposits are made by persons, not on the faith of the person acting as cashier or actuary, but upon the faith of the gentlemen who act as trustees.... If, therefore, the clerk or other person employed by them (the trustees) is guilty of peculation, they are themselves liable for any defalcation which may ensue.” Whether this decision was right in law or not matters little now, inasmuch as the Act of 1828 released the trustees from any such obligation entirely, declaring as it did that “no trustee or manager should be personally liable, except for his own acts or deeds, or for anything done by him;” and even this was again limited “to cases where he should be guilty of wilful neglect or default.” The valueless character of the safeguards granted to those who of all classes most needed ample security for that for which they had pinched and economized soon began to be seen.

Having limited the period of our survey in this chapter to the year 1844, we cannot here introduce the case of the great frauds in Savings Banks which created such painful sensations all over the country as one by one the most monstrous iniquities practised on the most deserving of the poor came to light. Our only reference here will therefore be to one such case in Ireland, and the first instance of the kind in England.

The case of the Cuffe Street Bank in Dublin, which, so far as we can find, was the first serious defalcation committed on Savings Banks made public, was also one of the most ingenious instances of an accumulation of frauds on record. The other case occurred in connexion with the Hertford Savings Bank in 1835. The Dublin fraud brought to light earlier than this date deserves the first place, not only on this ground, but because it was greater in extent and deeper in villany. No one can read of the numerous cases of fraud which have occurred at different times in connexion with the Irish Savings Banks without feelings of deep indignation. The influence, it is quite clear, is felt in Ireland to this day. The Irish people are quite an exceptional people, with whom forethought and self-control are not indigenous. One of the most important organs of public opinion in Ireland, in alluding to such topics, has said that “nothing can be expected from the Irish peasant until he learns to restrain his irregular impulses—impulses often generous, but too often impetuous and ill-directed—until he learns to make the gratifications of the present yield to considerations for the future.” For many years the Irish poor were left to themselves, and the result was shown in their reckless and determined improvidence. The institution of Savings Banks is described as having come to the Irish industrial population like a ray of hope. Great improvement took place. The Irish labourer has never been worth so much as the English one,—the wages of many at the period of which we are speaking being generally sixpence, and scarcely ever more than a shilling a day,—and yet it can be proved that this very class had managed to contribute to the Savings Banks in Ireland, up to the year 1841, no less a sum than 2,000,000l. out of the total of 2,800,000l. then remaining in Irish Banks. It is impossible for pen to describe the result of a bank failure, occasioned by the worst possible circumstances of fraud, upon such classes as these. The actual failures spread dismay over the entire country. The loss they sustained was their ruin; for, so wronged, scores of them were thrown back despairing on their former recklessness, and referred to their treatment as full excuse for any amount of subsequent improvidence. And men will hesitate before they blame them.

The Cuffe Street Savings Bank at Dublin was originally established in 1818 as the St. Peter's Parish Savings Bank. It was started by several of the most influential gentlemen in Dublin, who formed themselves into trustees and managers. The then Archbishop of Dublin, Archdeacon Torrens, Judge Johnson, and Serjeant (afterwards Lord Chief Justice) Lefroy being among the most prominent. On the strength of the well-known character and wealth of the trustees, this bank from its commencement did a very large business; so much so, that it was calculated to have received in deposits in one year (1831, when the bank was at its best,) no less than 100,000l. The bank began on an unpretending scale enough, to judge by the appointment and pay of its only salaried official.[62] This person was a Mr. Dunn, who combined in 1818 the functions of sexton to the parish with which the bank was immediately associated, with that of actuary of the bank, at a salary of five pounds a-year. The rector of the parish was security for Dunn; but all such considerations troubled the trustees but little. On the strength of this person's religious character, for “he was a very correct man,”[63] he soon became factotum. Almost from the first a boy of the name of Ballance, whom Dunn had taken from a charity school, was his book-keeper. This lad was also a kind of general servant of Dunn's, living with him in his house, and soon became his perfect tool. Without making him his confidant—for the actuary was too cunning, as it seems, for that—he used him exactly as if he had been one. For eight years Dunn managed solely the affairs of the bank, giving the most perfect satisfaction to every one, depositors as well as trustees. In 1826, however, a Mr. Lannigan, a barrister, comes prominently upon the scene. This gentleman was a trustee, and seems to have been dissatisfied with being one merely in name. Mr. Lannigan began, therefore, a little “meddling,” and from the way his interference was received, this trustee, shrewder than the rest, began to suspect something not quite right. He then looked narrowly into the system of keeping accounts, and was not long in finding sufficient to awaken the strongest suspicions of Dunn's malpractices. Dunn, however, had not been asleep all this time. He not only with great ingenuity kept his accounts as square as possible, but operated upon the credulity of the other working trustees, and succeeded in getting a party among the number to form a wall round him. On Mr. Lannigan mentioning his suspicions to his brother trustees, Dunn's machinations stood him in good stead: they would not hear anything to the prejudice of this “very correct man.” Mr. Lannigan repeated his attempts with the same effect; was considered a suspicious and troublesome fellow, and got no little abuse for his pains.[64] For five years it is said this unseemly contest went on, and although this trustee succeeded so far as to get more than one sub-committee appointed, nothing came of it: the committee were too prejudiced in favour of their servant to go the right way to work in investigating the matter, or they were too easily blindfolded by him to find anything out. Mr. Lannigan, however, persevered in his opposition, and was rewarded by Dunn's retiring, amidst the condolences of the whole parish, which evidently thought him a very ill-used man. Soon the tables turned; and grief of this cheap sort gave place to bitter indignation. Immediately after the man had resigned a depositor applied for some money, when, on comparing his pass-book with the ledger, the account was found to be open in the former and closed in the latter. Hereupon the ci-devant parish sexton absconded. With eyes at length wide open, the trustees called for the books of other depositors, and without as yet making any noise, soon found that Dunn had appropriated 6,000l. to his own use. The trustees then communicated with the National Debt Commissioners, and asked their advice in the emergency, suggesting that some one should be sent over to inquire into the circumstances of the bank, and to close it, if it were found necessary to do so. Mr. Foot, one of the trustees, a Director of the Bank of Ireland, who had been one of Dunn's strongest friends, and who was now one of the most anxious that the position of the bank should be retrieved, took the communication to London, and succeeded in securing the services of Mr. Tidd Pratt. That gentleman went to Dublin, however, not to investigate the case; but simply to make awards, stating how far and in what cases the trustees were liable to pay the depositors. He adjudged in 208 cases, and to the amount of 11,864l. Of this sum 7,500l. were to be paid by the trustees out of the funds remaining in the bank, while the rest claimed up to that time did not consist of legal claims, as the money had been paid to Dunn out of office hours, at his private residence, and even in the street.

Mr. Pratt found out in making his awards that almost every legislative enactment relating to Savings Banks had here been systematically violated; that the bank itself had rules founded upon the Act, but that they had all been evaded. Depositors had placed as much as 200l. in the bank in one year, and had received interest upon all they had deposited; the same individuals were also found to have had two different accounts in the bank. In all cases of this kind where a deficiency existed Mr. Pratt ruled that the depositors could not legally recover, but he recommended in his private capacity, that if the bank were carried on, such sums might be paid out of the accruing yearly profits. Mr. Pratt is said to have recommended in the same way that the bank might go on under a fresh management, and seems to have appointed another set of trustees for the purpose; at the same time informing them that the National Debt Commissioners would receive without remark the yearly statements as usual, though those statements must of necessity for some time to come exhibit an increase of liabilities over assets. The bank was carried on, and against Mr. Pratt's advice the whole of the claims were at once met, “with a view,” as the trustees said, “to induce a more perfect confidence.” In 1845, the Government observing that year by year the bank was getting into a worse financial position,[65] made an attempt to close it; but on the case being submitted to the Attorney and Solicitor General, they found they could not do so unless the Annual Returns were not sent. The Returns, worthless as they were, had been regularly sent, and thus the Executive was powerless. After another crisis at this period, the bank finally went down in 1848, the liabilities amounting to the sum of 56,000l. and about 90l. to meet it. The number of depositors who had accounts with the bank at the time was 1,900, nine-tenths of whom were poor people. In a debate which occurred in the House of Commons immediately after this failure, Mr. Reynolds, the member for Dublin, commented in strong terms on the conduct of the National Debt Commissioners, who had known the state the bank was in for fifteen years, and had never zealously interfered.[66] This member also stated his intention to move for a Select Committee to investigate the whole question. The Chancellor of the Exchequer said he saw no objection to such a committee, and it was subsequently appointed. The proceedings of that committee, and the assistance which was given to the defrauded depositors after much debate, will be referred to in their proper place in the next chapter.

The results of this fraud in Dublin and the neighbourhood was most disastrous; not only so, but years afterwards, in remote parts of England as well as Ireland, this case of fraud was referred to with considerable bitterness, and urged as an excuse for prodigality and recklessness. There was at the time a still more important Savings Bank, with several branches, in Dublin; and so great was the effect of the fraud, that nearly all the money deposited in this bank was withdrawn within four weeks, and it was a considerable period before it recovered its position. The depositors in the Cuffe Street bank were of the poorest classes, and the effect upon them when they found they had been robbed of all they had is described as painful in the extreme. “Dealing with the case, and the details of it,” said one influential gentleman, “I have never seen anything more calculated to excite painful feelings than this was; some of the depositors were on the very verge of wretchedness and destitution, without a shilling to support them.” According to another excellent authority[67] some died of want and distress, and many of them had to seek the shelter of the workhouse. Before the case came on for discussion in Parliament, several petitions were presented to the House of Commons, praying for help, and setting the pitiable situation in which the frauds had placed many of the depositors before the public; and one, signed by 5,076 citizens of Dublin, with the Protestant and Catholic Archbishops of Dublin heading the names, bore out in full the facts to which we have just alluded.

The fraud in connexion with the Hertford Savings Bank was one of the earliest cases that occurred in England, the particulars of which have been made known. This bank, as will be remembered, was one of the first formed in this country. Like many more of the original banks, this one was conducted on the principle of making it a Head office for the surrounding district, with branch banks radiating from it as from a centre. Clergymen, as has already been stated, almost exclusively acted as the Agents for these branch banks. The Rev. Mr. Small, a clergyman at St. Albans, acted in this capacity in that town, and in the course of a connexion with this bank, extending over a period of several years, contrived to embezzle the money entrusted to him to the extent of 24,000l. This he did in two different ways. In the one case, he received deposits and did not remit them; and in the other, acting with due clerical discretion, he applied to the Head bank for sums in the names of depositors for which he had not received their warrants. The systematic frauds of this reverend gentleman were found out when the St. Albans Bank was detached from the parent stock under the erroneous impression that it was strong enough to commence business on its own account. It appears that in this way the trustees of the principal bank were only liable for half the amount of the defalcations; but it ought to be placed on honourable record, that eventually, through the liberality of the trustees, who, fortunately, were principally rich noblemen, the poor depositors were reimbursed of their losses in full. We have gathered the above facts from statements made in the House of Lords in 1835, and as the question of the liability of trustees and the security of deposits was then largely introduced, it may be interesting to follow up the story with a few remarks to which the case gave rise. The Marquis of Salisbury, one of the trustees, asked the premier, Lord Melbourne, if the law, as it then stood, could not be altered. The liability of trustees, inculpating, as it might, innocent men, rendered many gentlemen most anxious to withdraw their names from such offices. This was one horn of the dilemma. The other was, how depositors could be made to feel secure. “It was no trifling matter. When Savings Banks were first formed, but few individuals could ever have expected that the sums subscribed would amount to what they now were.”[68] It was high time that the security of these savings, and as to who was liable for them, should be once for all distinctly settled. Lord Salisbury was sure no one would like to remain a trustee without knowing the amount of his liability. He then appealed to Viscount Melbourne—who with himself was a trustee of the Hertfordshire Bank, and would have to pay a share of the loss—whether he would not have a bill brought in to remedy the grievance. Lord Melbourne thought it was not necessary. Much as he lamented, for his own sake and that of the country, what had occurred down in Hertfordshire, he did not think that in consequence of this one misfortune they should interfere with the general business of the Savings Banks in the country. Let them look sharper after the management, and then such things would not occur. Lord Brougham believed there had been great carelessness in the case of this particular bank, “but was happy to find that the trustees were such undoubtedly solvent men.” Lord Salisbury and the Duke of Richmond were certain, if nothing had to be done, that many trustees would at once withdraw their names, “and then,” said the latter, “the body of depositors would withdraw their money.” Lord Denman reminded his noble friends that, if the trustees acted so, their responsibility would, in all probability, follow them into their retirement,—“he was by no means sure that their withdrawal would put an end to their responsibility.” The Earl of Wicklow hoped that nothing would be said or done which would destroy the confidence of the public in Savings Banks. He trusted that, in this instance, “the trustees would be found liable for the whole of the deficiency.” Lord Salisbury thanked the noble Earl for his kind wish, but explained how it was not possible that this could occur. An alteration in the law was eventually made, but the consideration of this change we leave till the next chapter.

[45] Cobbett's Register. January, 1817.

[46] Nearly, but not quite. Injury is still done by false and mischievous teachers of working men; and the latter resent what they consider their wrongs and grievances in ways which are equally unjustifiable, if not exactly similar to those adopted by their fathers. Those who would do real service to the working classes are those who take up and expose the fallacies of living demagogues, by which the latter are misguided and led to injure themselves by strikes, combinations, and hostility to capital and machinery. And educational reformers will do the State good service in endeavouring to get lessons taught in political economy to those who will be at some future day our mechanics and artisans, and who from continued ignorance of the inevitable laws of supply and demand, of the value, even to them, of the security of property, of the laws which regulate the operations of the market, may possibly fall into the errors and the mistakes of their predecessors.

[47] Report of the Committee appointed by the Highland Society of Scotland to consider what is the best mode of forming institutions of the nature of Savings Banks, for receiving the deposits of labourers and others. Edinburgh, 1815.

[48] Nine-tenths of the existing Benefit Societies are still held at public houses. This arrangement must always be, so long as it exists, a theme for reprobation. There cannot be many greater anomalies than this of the association of the club and the cup, the bane and the antidote, saving and wasting. Speaking on this point, the Rev. J. B. Owen justly remarks that the strange association “together verify the old pagan fable of the tub of Danaus full of holes, whose daughters were condemned to be perpetually filling it, while all that was so laboriously poured in as wastefully and hopelessly ran out.” Or, as some one else has put it who has employed the same figure more strikingly:—

"Like Danaus' tub
Is the public house club:
Their customers' mouths are the holes;
Ill spared is the 'chink'
That's wasted in drink,
To the bane of their bodies and souls."

[49] See next page.

[50] Quarterly Review, vol. xxxii. p. 189.

[51] “Many a man in that year,” (1825), says Miss Martineau, “set up for a banker who would, at another time, have as soon thought of setting up for a king.”—History of the Thirty Years' Peace. Lord Liverpool complained afterwards of the system “which allowed any petty tradesman, any cobbler or cheesemonger, to usurp the royal prerogative, and issue money without check or control.”

[52] One prospectus of this date sets forth that, in the district proposed for a mine there was “a vein of tin ore at its bottom, as pure and as solid as a tin flagon.” Another, “Where lumps of pure gold, weighing from ten to fifty pounds, were lying totally neglected,” the quantity of gold in the mine “being considerably more than was necessary for the supply of the whole world.” Mr. Canning, in reference to the companies projected, said soon afterwards, “They fixed the public gaze, and excited the public avidity so as to cover us, in the eyes of foreign nations, if not with disgrace, at least with ridicule. They sprang up after the dawn of the morning, and had passed away before the dews of the evening descended. They came over the land like a cloud; they rose like bubbles of vapour towards the heavens, and destroyed by the puncture of a pin, they sank to the earth and were seen no more.”

[53] Annual Register, 1826.

[54] Progress of Savings Banks. A series of tabular views, 1829 to 1841, by Mr. J. Tidd Pratt. London. 1845.

[55] Companion to the Almanac, 1839, p. 131.

[56] See [next page].

[57] We give the statistics as relating to England only. Scotland is out of the question, not merely on account of the slow progress of Savings Banks there, but more especially because of there being nothing analogous in Scotland to our English system of Poor Law relief.

[58] The mortality at the commencement of the present century was 1 in 40; in 1831 it was 1 in 58; and in 1841, 1 in 62; showing conclusively that the masses of the people were better housed, better clad, and, best of all, better fed.

[59] Miss Martineau's History of the Thirty Years' Peace, vol. ii. p. 88.

[60] Times, September, 1844.

[61] To make this statement more clear, we append a later Return, which, on other grounds, is interesting, as showing which classes of the community resort most frequently to Savings Banks. It speaks volumes as to the culpability of the higher paid English operative, that the agricultural labourer, with ten or twelve shillings a week, contrives to save more, relatively, than he does.

Something of this result can of course be traced to the varying facilities, such as the number of banks, which were not always established in the most populous localities.

[62] Vide Report of the Select Committee appointed to Inquire into and Report upon the circumstances connected with the failure of the Cuffe Street Savings Bank, 1849, from which our account is derived.

[63] “I am certain,” said a reverend witness, “that he was a very correct man until the temptation of such an enormous quantity and overflow of money got into his hands.”—Report (36).

[64] One of the questions asked, by the Chairman of the Committee just quoted from, of Mr. Fox, curate of St. Peter's, Dublin, was (32): “Do I understand you to say, that Mr. Lannigan communicated his suspicions regarding Mr. Dunn to the Board of Trustees?” “Yes,” answered the reverend gentleman, “and we used to have extremely warm contests there on that account, because he was not a man very capable of explaining his meaning.”

[65] The whole of Dunn's defalcations, which were found ultimately to amount to about 40,000l. were not found out till this year.

[66] Great attempts were made to show, at this time, that the Government had grievously neglected its duties, and that the Arbitrator exceeded his. From the anomalous and unsatisfactory state of the law, which occasionally placed the Commissioners and the Certifying Barrister in embarrassing positions, a colour was often lent to these allegations. It is very clear that flagrant mistakes were palmed upon the National Debt Office, and never found out, and not less certain that, at this early period, Mr. Pratt was often hampered by uncertain and incomplete powers.

[67] Dr. Hancock, in a pamphlet entitled, Duties of the Public with respect to Charitable Savings Banks. Dublin, 1856.

[68] About sixteen millions sterling.

CHAPTER V.

LEGISLATION ON SAVINGS BANKS FROM 1844 TO THE PRESENT TIME.

“If there is any question why such importance should be ascribed to measures of a purely economic character, the reply is, that these minor matters insensibly build up the character of the nation; insignificant, it may be in themselves, they mark, in the aggregate, the well-being or the suffering of the British people.”—British Quarterly Review.

It will be remembered that in the third chapter we described the course of Parliamentary action with regard to Savings Banks down to the year 1844, and in that chapter left Mr. Hume, after an unsuccessful attempt to reduce still further the rate of interest to be given to depositors. The year 1844 is remarkable in the annals of Savings Banks for the carrying of a measure known as Mr. Goulburn's Act. The bill which was introduced by that gentleman, who was Chancellor of the Exchequer in Sir Robert Peel's administration, was meant in great part to provide against the constantly recurring frauds in Savings Banks, and still more especially to allay the consternation among trustees of safe banks, who now loudly complained of the state of the law with respect to their liability. The discussion in the House of Lords to which we alluded at the close of the last chapter may be taken as showing that Savings Bank trustees were by no means satisfied, several years before this, with the uncertain state of the law. The great fraud on the Dublin Bank is described as having come upon many trustees like a thunderbolt, and, aware that they were not spared by the judicial bench[69] in cases of the kind, they now threatened open rebellion. Mr. Goulburn received, as he stated subsequently before a Committee of the House of Commons, a large number of notices from such officers that, if the law were not modified, they would resign their trusts. Moved by such considerations as these, which the Government seem to have felt they could only disregard at the imminent risk of shaking the credit of the entire Savings Bank system, Mr. Goulburn introduced his bill (7 & 8 Victoria, chap. 83,) on the 2d of May, 1844, to amend the laws relating to Savings Banks.[70] The principal matter with which the bill dealt was the liability of trustees, but this was by no means the only one.

Second only in importance was the proposal to again reduce the rate of interest. The remarks with which he introduced his proposal to reduce the interest rate are curious, to say the least, when viewed in the light of the speech to which we have previously referred. He felt confident, he said, that the country had no right to pay upon these investments a higher rate of interest than could be obtained from an investment in other securities. The Savings Banks rate was considerably higher than any other investment of money. Although the Act of 1828 had tended to reduce materially the number of depositors of the better classes, and had increased—as we have shown in the last chapter, we think quite conclusively, so far as figures can show it—in a still greater proportion the number of those who had deposited only small amounts, there were still many who were attracted to Savings Banks on account of the interest given being higher than that obtained from the Funds. Mr. Goulburn now proposed that the bill should contain a clause reducing the rate from 2-½d. per cent. per day, to 2d. With the same object in view, namely, to restrict the operations of Savings Banks to the class of provident poor, the Chancellor proposed to reduce the amount which any one could put by in one year from 30l. to 20l. and to make the total amount which could be deposited in any Savings Bank, 120l instead of 150l.[71]

A further proposition, which provided for another wide-spread evil in the same direction, was one requiring that no persons should be permitted to make deposits as trustees without stating the names of the persons for whom they were acting, and that no payments should be made in such cases except under a receipt signed by all the parties interested in the funds deposited. By means of the clauses in previous acts relating to trust accounts, the law was regularly evaded, and many persons had considerable sums of their own in Savings Banks, which they represented as being held in trust for other people, whose names even they were required not to divulge.[72] This clause was carried without any trouble, as it met such a palpable evil; provision was made, however, that the law should not be applicable to trust accounts opened before the passing of the act. Had it not been for such an exception, those who had recourse to the stratagem of feigning the character of a trustee might have lost much of their money, on account of the difficulty or impossibility of obtaining within the time the signature of the party apparently interested. Though the clause was not made retrospective, as some urged it should be, as a punishment to those who had deceived the managers of Savings Banks, it was clearly the best thing that could be done to put an end to the practice, which entirely depended on the powers of the so-called trustees to draw out the money alone.

Mr. Goulburn spoke next on the question of liability of trustees. Though the topic was engaging great attention out of doors, little was said upon the point on this occasion: the section of the act thus passed so quietly, was, however, pregnant with meaning, and, as it turned out, pregnant with results. The clause provided that no trustee or manager of any Savings Bank shall be liable to make good any deficiency which may hereafter arise in the funds of any of these institutions, unless these officers shall have respectively declared, by writing under their hands, that they are willing to be so answerable; and not only so, “but it shall be lawful for each of such persons, or for such persons collectively, to limit his or their responsibility to such sums as shall be specified in any such instrument.” This declaration was, of course, to be lodged with the National Debt Commissioners. On a trustee or manager making it, he became liable to make good every deficiency that might arise in the bank with which he was connected, whether through his own carelessness, or the cupidity of those under him; if a declaration of this sort were not made, he was liable for nothing.[73]

The above were the three most important changes made in the law of Savings Banks under Mr. Goulburn's Act, but there were several minor clauses introduced into the bill which deserve mention, and which were, there can be no doubt, equally with the more important sections, the direct results of the systematic frauds already described. With his eye direct on the Cuffe Street actuary, concerning whom the Government knew more than was generally known in 1844, the Chancellor, whilst studiously avoiding all mention of the Dublin case, spoke of those who, ignorant of business, took their money to improper places, and made deposits out of office hours. The fourth section of the Act was, therefore, designed to meet such cases, by declaring any actuary or cashier who should so take money out of course, and not account for it at the very first meeting, to be guilty of a misdemeanour, and liable to be punished for fraud. Section 5 required that deposit-books should be produced at the bank at least once every year for purposes of examination and check. Section 17 provided that bonds of sufficient security shall be given by every officer of a Savings Bank trusted with the receipt and custody of money, and that these bonds shall be placed (not with the Clerk of the Peace as before this Act), but under the charge of the National Debt Commissioners. The old arrangement likewise for depositing the Rules of the bank with the Clerk of the Peace was repealed by section 18, and in its place the next section enacted, that when a new bank was proposed, two written or printed copies of the Rules of such bank should be transmitted to the Barrister for his certificate, who, on approval, was to send one copy back to the Bank authorities, and the other forward to the National Debt Office. It was the 7 and 8 Vict. which, in addition, conferred extended powers on the certifying barrister, by appointing him final Arbitrator in any disputed case. The bill, after having been modified in one or two respects, and contested on several points,[74] received the Royal Assent in August, 1844, and was ordered to take effect on the 20th of November following.

It will not be supposed that the bill, of which the above is an outline, was passed through its different stages without a word from Mr. Hume. That member may well be forgiven for alluding on one of these occasions to the past, and stating, how, so far as the rate of interest was concerned, he had been fighting for the very thing which was likely to be brought about. This was clearly a case of patience and obstinacy rewarded.[75] The bill, however, Mr. Hume stated, scarcely went far enough for him, though it was in the right direction. He still held the opinion that persons holding Government security should be placed on the same footing, and that those who had 20l. in the Funds should be dealt with in exactly the same manner as those who had 1,000l. In this, however, we cannot help thinking Mr. Hume went rather too far, and argued on the assumption that there was no difference between the shilling of the rich and the shilling of the poor man. Mr. Goulburn in replying to Mr. Hume said, he knew this was a favourite point with the member for Montrose; but he could not concede it: a poor man with 20l. in the Funds could not and never would be able to bear a fall in the Funds so well as the large stockholder.

Early in 1848 a Committee of the House of Commons, consisting of the Chancellor of the Exchequer, Mr. Goulburn, Mr. J. A. Smith, Sir J. Y. Bullar, Mr. Shafto Adair, Mr. Bramston, Mr. Gibson Craig, Mr. Fagan, Mr. H. Herbert, Mr. Herries, Mr. Hume, Mr. Reynolds, Mr. Poulett Scrope, and Mr. Ker Seymour, was appointed to inquire into the state of the Irish banks. As already related in the last chapter, the Cuffe Street bank soon broke up after the trustees were enabled to take refuge under the Act of 1844. Into this inquiry, which we have before referred to, it is unnecessary to enter much further; it presents little else than information relating to the flagrant breaches of faith of officers to whom were entrusted the hard earnings of hundreds of the poorest people living around them. The scope of the inquiry was limited to Ireland. It seems to have been purposely intended that a full investigation into the general Savings Bank question should not now be made. The inquiry was not extended in any sense to the English banks, though some of the most prominent English managers offered to give evidence. Doubtless the Government feared that a full exposure of the frauds in Savings Banks, an inquiry into several matters connected with the disposal of Savings Bank money already beginning to be mooted, might have the effect of shaking the confidence of the people. People were openly saying that Government had not done its best to make the Savings Bank a secure repository for the people; yet, rather than raise this issue before a Committee of the House, it submitted to have the investigation that was made designated “a perfect star-chamber business,” and the members of Government themselves subjected to great ridicule. The Committee sat only nine days, and made a report to the House, which Lord George Bentinck characterized as “the most extraordinary one that ever was presented to Parliament.” “It is as remarkable for its brevity as for its vacuity—as brief as it is worthless.” The report is certainly brief, and may here be given without curtailment: “Your Committee,” it commences, “has proceeded with the inquiry entrusted to them by the House, but owing to the late period of the session they have found themselves unable to bring it to a satisfactory conclusion. They are of opinion that it is advisable that a further inquiry should take place, either during the recess or in the next session of Parliament, regulating the liability of trustees, and providing for the appointment of auditors to Savings Banks.”

The Government immediately set to work to introduce a bill. They saw that a great mistake had been made four years before, in settling the question of the liability of trustees in the way it was done, and now the endeavour must be, if possible, quietly to re-enact the old law in this particular, making trustees liable in the way they were before 1844. The great mistake in this instance, and that which proved fatal to the attempt, was in legislating for English as well as Irish banks, when the inquiry upon which the bill was taken to be founded had been limited to Ireland, and was not allowed under any circumstances to extend to England. The debates to which the measure of 1848 gave rise are certainly the most animated that ever took place in the House on this subject, and it will be interesting, as in different ways indicating the feeling of the country, to notice the expressions of opinion which the discussion elicited. The Chancellor of the Exchequer, Sir Charles Wood, in moving the Bill to amend the Law of 1844, appears[76] to have urged that the clause requiring the trustees to voluntarily assume responsibility had completely failed; that few trustees would take the responsibility upon them, and that, consequently, depositors were losing faith in the banks;[77] irregularities were increasing; and the trustees had not even the pretence of a sufficient inducement to make them attend to their self-imposed duties. In place of no responsibility at all, he proposed that each trustee should be responsible for a certain sum, which would be large enough to ensure a reasonable amount of attention, and so small as not to frighten them into resigning their office altogether. This sum it was proposed to fix at a hundred pounds. Clauses in the bill also provided for the appointment of auditors, as suggested by the Committee of Inquiry, and for the examination of depositors' books, “that once in each year the books of every depositor shall be produced at the office of each Savings Bank, for the purpose of being inspected, examined, and verified with the books of the institution by the auditor.”

More from the way in which this bill was introduced and the circumstances attending the Committee of Inquiry, than from any decided opposition to the Government proposals, much agitation prevailed among Savings Bank officials, which was ultimately made to extend to depositors.[78] The latter were led to believe that the proposed legislation would in some way be inimical to their interests, and petitions were got up, praying that no further Acts should be passed until a full inquiry was made into every part of the Savings Bank system. Sir Henry Willoughby, who for some years before this time, and till his death, took much interest in this and cognate questions, again presided at a meeting of Savings Bank managers in London about this time, and helped them to concert measures of opposition. Before speaking in Parliament on the introduction of the bill under consideration, he presented two large petitions, signed by 79,000 depositors in Savings Banks, praying that Government would cease their interference with these institutions. This gentleman then referred to the quietness with which Government had introduced such an important bill, “not having given such a notice as was invariably given even with respect to the commonest turnpike road.” And the quietness was a mistake of no ordinary moment. Had the details of the bill now introduced been understood by the country, there might have been opposition from managers of Savings Banks, but there could not well have been so much dissatisfaction expressed by the Press, or by the body of depositors, whose interest every clause of the bill was meant to conserve. Sir Henry Willoughby also on this occasion gave utterance to the feeling which was in many other minds, and which had led to the opposition then manifested, by alluding to “the impression which had got abroad and which he believed was perfectly true, that the money of depositors was used for other purposes by the Government than those that related to the Savings Banks.” Whether the money was used advantageously or not he would not say, for that was not the question. Colonel Thompson spoke strongly of the erroneous impression that everybody had been in about the Savings Banks having full Government security for their money; so strongly, indeed, that in another place we shall make further allusion to him. The bitterest opponent, however, which the Chancellor met with on this occasion was the leader of the Opposition in the House. Lord George Bentinck felt sure that the bill was one which its mover (Sir Charles Wood) did not understand. After going into the details of the measure, and endeavouring to prove that the examination of depositors' books could not be accomplished in the larger banks every year,[79] and that the smaller concerns could not afford to pay for auditors out of the small surplus of interest which went to pay expenses, Lord George added, “Surely a Government which had proposed so much and done so little, can refrain from doing harm, since they cannot do good; and will not press this most discreditable bill through the House at the end of August without necessity for it, and against the opinions of those best calculated to form a judgment.” Irish members, seeing the turn the discussion was taking, urged that, at any rate, the bill might apply to Ireland. It was patent to everybody that the poor depositors in Ireland needed every protection, however secure the same classes might feel in England. In Ireland such a bill was really required, and was necessary, to restore confidence in Savings Banks;[80] why not make it apply to Ireland only? After an unsuccessful attempt on the part of Lord George Bentinck to throw out the bill altogether, it was decided, on the motion of Mr. Wodehouse, and by a vote of thirty to eleven, that the words “Great Britain” should be struck out of the motion, and that the Act should simply apply to Irish Savings Banks.

That the bill now passed was a beneficial change in the law, and a considerable step in the right direction, no one now doubts; had not the perverseness of Savings Bank officials prevented the Government from making its provisions apply to England, much subsequent suffering and grievous loss would have been saved to many of the best classes of our industrial population. It was a safeguard such as was wanted in Ireland, and it answered admirably.

The bill having been made law, and new depositors secured to a considerable extent from robbery and exaction, the attention of the Legislature was called to those who had lost their all by past frauds; and the records of Parliament show that one member after another reverted to such topics until redress was obtained. On the 29th of March, 1849, Mr. Reynolds, the member for Dublin, moved for the appointment of a Committee to investigate into the case of the Cuffe Street bank in Dublin, and to ascertain who were liable for the extensive frauds in that bank. He alluded to the unsatisfactory result of the previous inquiry, which was, indeed, not meant to be final. In making his motion, Mr. Reynolds, who had access, of course, to the best sources of information, entered into a full account of this bank, stating, indeed, many of the facts which we have already given. He complained most bitterly of the Government, who had accepted the advice of a “flippant barrister,” as Mr. Pratt was designated, and who had suffered the bank to go on when it was known to be in a state of hopeless insolvency. He described the heartrending scenes which he had witnessed in Dublin, owing to the failure of the bank, and during the last eighteen months, and related some of the cases to the House, where they had ended in insanity, death, or suicide. That the depositors were mostly poor persons he proved, by stating the average amount due to each of the 1,664 persons who were creditors of the bank to be but 27l. Mr. Reynolds added, that he had no hesitation in saying, under the peculiar circumstances of the case, that the Government ought to make good the loss.[81] If he had not proved that point, he left it to a Committee of Inquiry to take up. “In the name not only of justice, but of mercy and compassion,” he besought the House “to agree to his motion, and to save many poor persons from utter and total ruin.” The member for Dublin University (Mr. Napier) seconded the motion for inquiry, and discussed many of the details of the failure from a legal point of view. In one remark, he gave expression to a very general feeling: the course of legislation on Savings Banks had plainly been to reduce, for strong reasons doubtless, the responsibility of trustees; in proportion, however, as that responsibility was reduced, so he, Mr. Napier, thought the moral responsibility of the commissioners increased. “Precisely in the same degree as the trustees were relieved, should the vigilance of the other body have been awakened.” Nor was it less unfortunate—though this is a matter which was not alluded to—that at a time when it was thought most fitting that the interest on deposits should be reduced, steps should also be taken to make them less secure as well as less remunerative.

Mr. H. A. Herbert, the member for Kerry, proposed an amendment, extending the inquiry to this Tralee and Killarney banks, and also to the single case of failure in Scotland, at Auchterarder. Mr. Herbert dwelt upon the case of these frauds in an able manner, but we reserve the consideration of them to the next chapter. The reference to the Scotch case doubtless called up Mr. Cowen, the member for Edinburgh, who was sorry to hear of the necessity for any such inquiry in Scotland; he “had been accustomed to think that they were above suspicion in Scotland with reference to their banking matters.” Mr. Cowen said that he regarded all discussions on Savings Banks as most momentous, and as involving the consideration of the most important national questions. “It was of the greatest importance that Savings Banks should be placed on a solid foundation, and cleared of all those injurious anomalies which now attached to them,” for he “believed that they might be made the means of aiding in a great measure to stem that flood of pauperism which was now overflowing the land.” Much warm discussion followed. The Chancellor of the Exchequer alleged that the proposed inquiry would be both a useless and an expensive one; and Mr. Goulburn, the ex-Chancellor, who was equally committed to the same course of legislation and the difficulties which that legislation had brought upon the Government, rendered prompt assistance by saying exactly the same thing. On a division, it was carried by a majority of three in a House of 100 members, that a Committee should be appointed; and by a majority of eight, that the inquiry should extend to the three Irish and the Scotch defaulting bank.[82]

It was one thing, however, to carry a Committee of Inquiry in the face of both the great parties of the House, and another to nominate the members who should compose it; and this Mr. Reynolds subsequently found out to his evident chagrin and disappointment. The Government had clearly not been sufficiently on the alert, and hence they had been beaten in the first particular; they secured themselves however against any further defeat. In the following April, Mr. Reynolds proceeded according to usage to nominate his Committee, which he wished should consist of eight English and seven Irish members. The Chancellor of the Exchequer objected, and wished for the reappointment of the Committee of the preceding session. Mr. Goulburn promptly assisted by saying, that it would be a reflection on the Committee of last year if it was not so reappointed. In that Committee there were only three Irish members, though the subject then, as now, had exclusive reference to Ireland. Mr. Reynolds, Mr. Herbert, Sir Henry Willoughby, stoutly contested the point, which ended in the names of two additional Irish members being proposed. The Government saw the importance of the question, and that the inquiry would be made in this way to turn upon the administration of Savings Banks generally, and the responsibility of Government in regard to them, and succeeded in resisting any change by an adverse majority of 111 to 74. The whole of the names not having been gone through on this occasion, the Irish members returned to the subject again a few days subsequently. “In the names of the poor who had been rendered paupers by laws badly administered,” one member asked, “for an impartial jury.” Some of the daily papers had declared that the Government meant to pack the Committee and so get a favourable decision, and this encouraged the independent members to persevere. Mr. Herbert said, “the Government all along most consistently attempted to quash inquiry.” He condemned in strong terms, and under the apparent approbation of the House, the conduct of Mr. Pratt in relation to the Irish banks. Mr. Reynolds declared he would divide the House upon all the remaining names offered by Sir Charles Wood. After two divisions, however, when he was left in a minority of 42, and 59, in a House of 202 members, he desisted from carrying out his threat; though he had a close phalanx of followers, he saw he had no chance against the combined hosts which the leaders of the two principal parties in the House had brought to bear.

The members ultimately appointed were the Chancellor of the Exchequer, the ex-Chancellor, Mr. Herries, Sir George Clerk, Mr. P. Scrope, Sir G. Y. Bullar, Mr. Ker Seymour, Marquis of Kildare, Mr. Adair, Mr. G. Craig, Mr. W. Fagan, Mr. Bramston, Mr. J. A. Smith, Mr. H. Herbert, Mr. Reynolds. This Committee sat thirteen days, and examined nine witnesses, including several officials connected with the Cuffe Street bank, Mr. Tidd Pratt, Mr. Higham of the National Debt Office, and Mr. Boodle of the St. Martin's Place Savings Bank, but came to no conclusion, and recommended nothing to the House.

On the 13th of May, 1850, the same gentlemen were reappointed under the self-same conditions as in the previous year: they sat eleven days, and examined some of the same and other witnesses, and on this occasion made a long and exhaustive report to the House.[83] This report, for which all the members except Mr. Reynolds and Mr. Herbert voted (each of these gentlemen having produced a report of his own which the Committee would not accept), went over the case of the defaulting Savings Bank in Dublin very succinctly; exonerated National Debt Commissioners and their officers from blame; stated that they found the commissioners did not exercise all the powers they possessed, but this arose “partly from a misgiving as to the effect of an exercise of their authority, and partly from an unwillingness to run the risk of creating a discredit of these institutions;” and that if the trustees had taken the advice of the commissioners, when in 1845 they advised them to close the bank, the loss to the depositors would not have exceeded five shillings in the pound. For these and similar reasons the Committee came to the weighty conclusion, relative to this particular case of fraud, that “while they cannot admit the existence of any legal liability on the part of Her Majesty's Government, they recommend the case of the depositors in the Cuffe Street bank to the favourable consideration of the Government, with a view to the adoption of some measure which shall at least mitigate the extent of their loss.” With regard to the other frauds into which they were instructed to inquire, they reported that there were “no peculiar features connected with them differing from those of other banks which have suffered from the dishonesty of their actuaries.” They concluded by expressing their conviction of the unsatisfactory state and working of the existing law; proper power did not reside with any authority “to check abuses, however indisputable;” by expressing their opinion that the provisions of the law of 1844 had worked in a manner obviously at variance with the intentions of Parliament, and wound up by the following important paragraph:—

“Your Committee have observed with much satisfaction that the Chancellor of the Exchequer has introduced a Savings Banks bill, which is calculated to remedy several important defects in the existing law, and extends the responsibility of Her Majesty's Government to the depositors; and they therefore abstain from all observations on this part of the subject, further than to state the conviction, which this inquiry has forced upon them, of the urgent necessity for further legislation, if those institutions, which have of late years acquired an extent and importance so little anticipated by the original founders of Savings Banks, are to preserve their hold on the confidence of the country, or produce the beneficial results expected from them in encouraging and rewarding the industry and self-denial of the working classes.”

This report was presented to the House on the 1st of August, and at once referred to a Committee of the whole House. Next day, the Chancellor of the Exchequer proposed that a grant of 30,000l. should be made to the defrauded depositors in the Cuffe Street bank, out of the Consolidated Fund. Sir James Graham opposed the grant. If this money was a matter of charity, he argued, they were opening the door to a dangerous principle; if of justice or equity, the claim ought to be paid in full. It was unworthy of the British public to compromise for ten shillings in the pound. Other members asserted that if Cuffe Street depositors were paid, the poor creditors of other insolvent banks would likewise have to be paid. Generally, however, the House felt with the Committee; it was altogether an exceptional case, the claims of the former being, as Sir Charles Wood expressed it, “something between equity, sympathy, and charity.” Mr. Bright, a resident of Rochdale, and Mr. Sharman Crawford, the member for that borough, whose ears had lately rung with the tales of heartless deception practised there, were both for paying these depositors in full; “there might be no legal claim, but there were the claims of equity and morality.” Mr. Bright, indeed, went so far as to say, that if Government would bring in a bill to secure other banks in future from these dreadful calamities, he would willingly vote that all claims from Savings Bank failures should at once be met by the State. The House divided on Sir Charles Wood's motion, when 118 members voted for it, and 39 against it. We may as well say here that several attempts were subsequently made to get the remaining 30,000l. from Government, but without avail.[84]

It will not be difficult for the reader to understand the position of affairs up to 1850. The law was clearly unsatisfactory; it had been pronounced so by Committees which, though composed of nearly the same members, had sat in three successive years, and patiently examined into the question in its every detail. The only difference of opinion indeed in the Committees was, as to the persons who were liable, and to what extent, for the defective state of the law, and the results to which it had led. Nor is it at all wonderful that legislation should have been needed. Savings Banks, as it was often pointed out about the time, had increased enormously within a short period, and beyond all proportion to the expectations which were originally formed with regard to them. When they were first started, many benevolent individuals entered heartily into the work of managing them, and asked for no return, except the sense that they had assisted in a humane and praiseworthy object, for the labour they underwent. Putting two considerations together—the great increase of business, and the no less certain decrease in the first ardour attending such enterprises—the increase of paid officials became absolutely necessary, and in almost a corresponding ratio did the unpaid machinery decline. Slowly but surely the management of Savings Banks went out of the hands of an unpaid into those of a paid staff of officials, and every year the system of check became more nominal than real.[85] It was apparent, not less from the proceedings of solvent Savings Banks than from the exposures made in the case of unsound ones, that those who had originally taken part in the establishment of these institutions slowly became honorary in place of active members of the board; and of those who still continued to take a share in the work, many had got into the habit of leaving their duties to subordinates, in some cases signing blank forms, and even cheques, to be filled up by the acting-manager at his discretion.

At this stage in the history of Savings Banks, the Chancellor of the Exchequer came forward,—as the reader has already learnt from the Report of the Committee of 1850,—with a bill to amend the law. This bill he introduced to the House of Commons on the 29th of April, 1850, and it forms part of our object to explain in detail the plan now proposed, inasmuch as for many subsequent years the same measure, with only trifling modifications, was offered over and over again to the consideration of the House, and as often declined, through the overpowering influence of the Savings Bank interest in the country. On bringing forward his bill, the Chancellor said he wished to avoid all reference to the past, except in as far as the experience of the past was a guide to future legislation. He very briefly traced the history and progress of Savings Banks, remarking at the time that, if he were not to do so, few could be aware of their real nature, and how they had grown to their present dimensions. We need not follow Sir Charles Wood through this account, nor even repeat the reasons which actuated the Legislature in making changes in the law from time to time up to the year 1844. Referring to the Act of that session, he described it as “most defective,” and the bill he wished to introduce would amend it. Speaking of the responsibility as to loss in Savings Banks, which many persons thought should rest with the Government, he repudiated the notion, unless Government was allowed to have some control over the persons who might occasion the loss. On the other hand, he did not wish to do away with “the most invaluable feature in Savings Banks—the local management.” He thought, however, that Government might take a medium course, and fairly meet the case by making such arrangements as “would end in the State bearing nearly the whole responsibility as regarded the receipt and payment of money.” What he proposed was to alter the enactment that the treasurers of Savings Banks should receive no emolument, and to vest the appointment of Treasurer in the hands of the Commissioners for the Reduction of the National Debt. The existing treasurers might in most cases be continued, and if they wished to work for nothing, they might still have the option; but he insisted on the Government reappointing such officers, and upon having a control over them. To this officer, or some one acting for him, all payments should be made over—the receipt and payment of money by any other person to be declared illegal.[86] He considered that this arrangement would guard against the possibility of fraud. The treasurer and secretary, acting for different interests, as it were, could scarcely be guilty of collusion, and the one would in all cases act as a check upon the other. If this plan were agreed to, the Government would of course be responsible for every farthing paid to the treasurer.

This was the great and distinguishing feature of the measure which the Government was disposed to adopt; but there were other features in the bill of considerable importance, which ought not to go unmentioned. Thus, it proposed that the Act of 1844 should be repealed, and that trustees should be responsible for their wilful neglect or default, as in the Act of 1828. It was clear, however, that under the appointment of treasurers the responsibility would be little more than nominal. Another point which the bill provided for was an efficient audit of the accounts, the trustees of each bank to appoint an auditor, and the pass-book of each depositor to be annually examined, the auditor in each case comparing the book with the ledger of the office.[87] The bill proceeded, further, to give power to the National Debt Commissioners to send down to any Savings Bank, should they see occasion for it, an Inspector, to test the accuracy of the accounts of that bank: with the other provisos already mentioned, depositors would thus be absolutely safe. The next clause provided against any further loss to Government. The Chancellor in introducing this subject spoke of the different rates of interest which had been given to Savings Banks, and said all of them were higher than could be given without loss. But this was not all. The loss sustained in having to pay out a large sum of money whenever called for, no matter how low the Funds were at the time, was equal almost to the former. After explaining the case, and giving examples of its working, he added that Government thus suffered a loss on capital and a loss on interest. “It had been proposed that Government should merely act as a broker, making depositors subject to all the fluctuations of the Funds; but,” said the honourable gentleman, “from the numerous communications I have received from all parts of the country, depositors think much of their getting their money back as they put it in, and looked to the amount of interest as a secondary consideration.” He then gave a variety of statistics, and proposed that the limit to the amount of deposits should be fixed at 100l. and that the rate of interest should be reduced from 3l. 5s. to 3l. for trustees, and 2l. 15s. instead of 3l. 0s. 10d. to depositors.[88] The Chancellor of the Exchequer concluded by expressing the wish that the bill of which he had given the principal clauses, should be discussed fully and temperately: it involved no party feeling, but it involved many things intimately connected with the welfare of the classes for which Savings Banks were established: he said he had done his best to meet the difficulties of the case, but difficult as it was to do, the matter ought at once to be settled, and to be settled once for all.[89]

It, however, was not to be settled so soon. Before we refer to any further expression of opinion on the subject in Parliament and the ultimate decision in the case, it is only right that we should present the other—the Savings Bank—view of the matter, as uttered by the powerful, we had almost said corporate, body at St. Martin's Place. The Committee of Managers of this important London institution met, as their custom was, to pass resolutions on any matter affecting Savings Banks. A petition to Parliament was framed on the resolutions come to in this as in other instances, and similar petitions were got up and presented to Parliament from other Savings Banks, who naturally looked to the St. Martin's Place institution for advice and guidance. At a meeting held at this representative bank on the 14th of May, 1850, Lord Walsingham in the chair, the proposals of the Chancellor of the Exchequer were gone through seriatim, and all of them, without exception, disputed and condemned. It came to the conclusion that (1) the proposed introduction into Savings Banks of a Government treasurer, &c., “must lead to great confusion, and eventually to the disruption of these valuable institutions;” (2) that “the proposed reduction of the existing rates of interest and the limit in the amount of deposits will, besides imposing injurious restrictions on depositors, so diminish the means of defraying the expenses of management as to render it extremely difficult in some, and impossible in other cases,” to engage efficient assistance; (3) that any further reduction of the rate of interest to depositors would only tempt them to withdraw their money from Savings Banks and place it in “more attractive, but frequently hazardous investments;”[90] (4) that the grand principle on which well-conducted Savings Banks have hitherto been so efficiently managed, viz., “that of having the constant superintendence of gentlemen unconnected with the receipt or payment of money, will be destroyed if the new bill should be passed into a law.” We ought to add that this Committee did not object to the abrogation of the law of 1844, which was passed “contrary to their expressed wishes and recommendations;” that, although they urged that frauds were comparatively rare, and far less in amount and extent than in public or mercantile establishments, and that for such reason there was no just ground for the introduction of an entirely new system such as was now proposed, they had no objection to a measure adapted still further to promote the solvency and good management of Savings Banks, only they must insist that the necessity for such important changes “should be considered by a Select Committee, and evidence taken from men of long experience in Savings Bank management.” The last resolution to which this body came was, “That a petition to the House of Commons, founded upon the foregoing resolutions, be printed and circulated for the information of other Savings Banks.”

To return to the discussion in the House of Commons on the bill now proposed, Mr. Hume in a temperate speech supported, on the whole, the Chancellor of the Exchequer. He held that Government ought to undertake one of two things—either to leave Savings Banks altogether alone, or else to ensure perfect security to the depositors, which he saw no difficulty in doing. Of course he agreed with the proposal to reduce the rate of interest and the limit of the total amount of deposits, remarking on the latter subject that he had known many cases where Savings Banks had been taken advantage of in a way that, he was about to say, was quite unworthy of them; “but let no man say that anything was unworthy where profit was the object, for he found in all ranks and classes a tendency to avail themselves of the folly of the public.” Government, he thought, could not do better than try to encourage among the labouring classes the habit of saving; “for the moment a man had a nest-egg he desired to add to it, and thus were habits of economy and prudence fostered among the mass of the people.” Sir Henry Willoughby opposed the bill; he thought the proposal to reduce the rate of interest would be “an extremely disagreeable measure.” He referred, however, on this occasion principally to the management of Savings Bank funds, and expressed his opinion that what was required was that the management of the affairs of Savings Banks should be taken out of the hands of the Commissioners of the National Debt, and a separate commission appointed for the purpose.

Few members questioned the wisdom of the proposals at this time, but many expressed themselves dissatisfied that the bill would have no reference to the past, and that the Chancellor had not alluded in any way to the depositors who had lost their all by the bank failures and by the action of the bill of 1844. Mr. Crawford spoke of the Rochdale depositors, Mr. Fagan of the Killarney depositors, and Mr. Herbert of the Dublin and Tralee depositors. Mr. Slaney thanked the Chancellor of the Exchequer for the amount of attention which he had bestowed on the bill, which he “deliberately thought would interest more persons than any other measure that would be introduced this session.” He thought the security now promised would be real, though he was sorry the Chancellor meant to make the people pay for it. His opinion (and he had considered the subject of industrial investments very largely) was that neither the amount of, nor the interest on, deposits should be reduced; he would “be most willing to pay a small bonus to tempt the savings of these poor people.” We are glad, however, to say that this view of the case did not meet with much approval. After several more appeals from such members as Mr. Bankes and Colonel Thompson, that Government would come to the rescue of the defrauded depositors who had, in their ignorance it might be, looked to the country for security, the bill was ordered to be brought in by the Chancellor and Mr. Attorney-General. On the motion made to read the bill a second time on the 8th of August, 1850, Mr. Hume and Sir Henry Willoughby importuned the Chancellor of the Exchequer to defer the consideration of the bill to the next session; the former urging that honourable members might study the reports of the Committees of 1849-50, during the interim, and the latter that time might be given “to allow of a consolidation of all the statutes relating to Savings Banks, and an inquiry into the whole subject.” The Chancellor replied, that after the agitation which had been got up among the managers of Savings Banks, and the considerable misunderstanding which prevailed relative to the provisions of the bill, he reluctantly consented to withdraw it.[91] Several members took the opportunity to urge that the Chancellor should bring the matter forward the first thing in next session; but the Savings Bank interest proved still stronger in 1851, and again Sir Charles Wood got nothing done, and never heartily took up the question again.

In 1853 an Act was passed to “Amend and Consolidate the Law relating to the Purchase of Government Annuities.” The bill was introduced and carried through by the Chancellor of the Exchequer. This Act continued the same powers to the Commissioners as were given in 1833, and the clauses relating to the purchase of annuities, deferred and immediate, were continued. It further empowered them, however, to grant deferred annuities for a sum to be paid down at once, and not returnable, and also to grant annuities otherwise than through Savings Banks. It was said that the reason why the Act of 1833 had been practically inoperative was the want of such a clause: that the fact of only being able to buy a deferred annuity on the condition of money being returnable, not only caused many lapses, but made the tables heavier than they ought to be. Under the fresh clause better things were augured; any one purchasing such an annuity, it was argued, takes the chance of his not living to receive it, just as the member of a benefit society takes his chance of never being ill, and therefore never needing what he pays to secure if his health should fail. The benefit in return for this risk is, however, proportionally increased, inasmuch as the contributions of those who do not live to the term when the annuities commence, go to swell the contributions of those who may,—the purchase-money, in the case of money being returnable, being of course much larger than in the other, where more risk is run. We give the argument for what it is worth; but it is certainly curious that at a more recent date, when again the law regulating the purchase of annuities underwent alteration and amendment, a great outcry was raised, because the tables of rates, “with money returnable,” were temporarily kept back; one respectable organ of public opinion going so far as to say that the changes would be inoperative till these tables were produced. An opposition was got up during the progress of the measure in Parliament, owing to the clause empowering the Government to grant life assurance policies to those who should likewise buy annuities. It was said now, just as it was urged, though much more strongly, subsequently, that there were great objections to the Government becoming a trading community, or doing anything which could be carried out by a private company. “The system of life assurance,” said a well-known Scotch member, “was at present carried on so successfully and so judiciously by the ordinary life assurance societies, that it would be most unwise to interfere with them.” Another member argued that the annuities scheme had so lacked success that no amount of tinkering would make it applicable to the country. The Secretary of the Treasury explained that Government were not anxious about doing the business of insurance offices, but only desired to give facilities, which the law did not then allow, for the conversion of Savings Bank deposits into a satisfactory provision for want or old age. The bill was read a third time, with a majority of 28 in a House of 56 members, and soon afterwards passed without any further difficulty, and received the Royal Assent. Such a measure, whatever the poorer classes might think of it, was well calculated to spread the spirit of independence amongst them. The State did well to offer the opportunity of increased facilities; and if those for whose benefit such schemes were intended did not avail themselves of them to secure, by a very small amount of temporary sacrifice in seasons of health and prosperity, a provision against those risks to which all the poorer classes are liable, of falling through unexpected contingencies into poverty and pauperism, the blame would rest elsewhere than with the State.

As we have already said, the session of 1851 passed without any attempt at legislation, and in the beginning of 1852, there being still no sign of action on the part of the Executive, the late Mr. Herbert, so well known in connexion with the Irish banks, proposed a resolution to the effect—

“That this House has observed with regret the continued neglect of Her Majesty's Government to fulfil their promise of introducing a bill for the regulation of Savings Banks, by which those important institutions may be enabled to preserve their hold on the confidence of the country, and a due encouragement be thus given to the industry and providence of the working classes.”

There was every reason to believe that this resolution would have passed, until the Chancellor of the Exchequer rose. Sir Charles Wood admitted that the bill had been far too long delayed; but this was no fault of his. It was thrown out in 1850; he could not get it introduced in 1851: it was ready, however, and it should be brought forward this session. He had not given notice of it, because he had been engaged in consultation with several members in so preparing the measure as to ensure its passage through the House. His firm conviction was, that the delay in the present instance had tended not only to improve the bill, but to diminish the chances of opposition to it when introduced. During the last four years the greatest pains had been taken to frame such a measure as should effectually remove the evils that had been complained of; and within the past few months they had had the assistance of a new Comptroller of the National Debt Office, who had “devoted himself with great diligence to the subject.”[92] He submitted, in conclusion, that he was not deserving of the censure of the House, especially as it had been settled to try the measure again during the present session. Mr. Disraeli agreed with Sir Charles Wood, though the resolution before the House was apparently justified by the circumstances, it would not be becoming in them to divide the House after what had been promised. The question was surrounded with difficulties, but notwithstanding these difficulties it was the paramount duty of the Legislature to grapple with it; and an opportunity would be soon afforded. Mr. Disraeli at this time did not know how soon he was to be in a position to grapple with the subject himself. Sir Charles Wood's pledge was not kept. All such measures as those we are considering have suffered greatly from the vicissitudes of administrations, and it was so in this instance. Towards the end of 1852 Mr. Disraeli succeeded Sir Charles Wood as Chancellor of the Exchequer in Lord Derby's first Ministry; but he had scarcely time, supposing him to have had the disposition, to take up the matter where it had been left. When the Derby Administration gave place to the coalition Ministry of Lord Aberdeen, and Mr. Gladstone took the place of chief financial minister, there was soon a better prospect of some settlement. Even under his auspices, however, matters at first went on very slowly; so multiform were the questions and interests involved, that even Mr. Gladstone's powers were severely tried to clear the ground of the incumbrances which time and prejudice had reared. When Mr. Gladstone left office and was succeeded by Sir George Lewis much had been done; the necessary preliminary measure of a full investigation into the Savings Bank question by a Committee of the House of Commons had been decided; the real nature of the connexion existing between the Government and the Savings Banks was better understood: and when after a lapse of two or three years he returned to his old position, he took the matter up where it had been left, and carried the subject, by his unapproachable eloquence and energy to an easy and final solution. Mr. Gladstone's name will go down to posterity covered with honourable trophies of his great powers; but we question whether among the great schemes he has carried any will be remembered longer than those meant to increase among the lower classes the habits of prudence and frugality.

Early in 1853, and when he had but just succeeded to the office of Chancellor of the Exchequer, Mr. Gladstone gave notice that the subject must be taken up, and if possible settled. A bill[93] was allowed to pass the second reading without discussion; but when the subject came up before Committee in July of that year, Mr. Gladstone, compelled to succumb to the wish that Parliament should be prorogued, asked that this and other bills might be deferred till the next meeting of Parliament. He said he had made great progress with the bill since it was first introduced; he had sought to get the opinion of the different Savings Bank managers upon it, and he believed he had acquired a pretty accurate knowledge of the state of feeling in the country on the subject.[94] All this was favourable to the prospects of the bill; but now, as the House had lasted since November 1852, he feared that if it was pushed forward it might fail to pass. He should have liked to have got the question settled, but he now thought his object would be more speedily obtained by the delay proposed. Here the sagacious Minister was mistaken; the old adage of no time being better than the time present could often be well applied to proposals to defer desirable matters of legislation to a future session. No mention was made of the subject for nearly eighteen months; the country had more pressing, and, for the time, much more serious matters to consider, which it will be quite unnecessary to particularize.

On the 20th of December, 1854, Mr. Gladstone moved for and obtained leave to bring in two bills during the session of 1855: the one “to create a charge on the Consolidated Fund” of the money due on behalf of the depositors in Savings Banks, and the other, the bill for the management of Savings Banks which was withdrawn in 1853. In the former important proposal the Chancellor of the Exchequer desired to make the law more perfect as to the relation between the depositor and the State, by giving the latter a better title to the money invested with the State. He wished, in his own language, “to reduce the obligation and the contract of the State with the depositor to that simple form which is adopted by every banker.” He would propose, “as respects the bulk of the funds received from Savings Bank depositors, that they should be held in this country as they are held in other countries,” and not in the complicated form of Stock and other public securities. Mr. Gladstone's view, more than once expressed in strong terms, with respect to the State using the money belonging to Savings Banks, was that it was no matter to anybody what was done with the money,[95] providing it were ready at call and the stipulated interest were given,—the stability of the country being surely a sufficient guarantee for its safety. Savings Bank authorities, on the other hand, disputed the right of the Chancellor to use the money; would prefer to use it themselves in other investments, if the funds were applied otherwise than under statute in the purchase of Bank Annuities; and referred to the uncertain title in law which depositors had for the money according to the governing statute. Mr. Gladstone's bill proposed to give this title to every penny so deposited with the State, by throwing the burden of any deficiency arising on the Consolidated Fund, and so silence at any rate the last objection.[96]

Early in the session of 1857 the then Chancellor of the Exchequer (the late Sir George Lewis) was several times asked if the subject of Savings Banks had not to be brought forward and concluded. These questions led to his promising to bring in the Government measure which, often brought forward and as often withdrawn, was still waiting for a tide of popular favour to carry it into law. On the 27th of February in this year he gave notice of this intention, and earnestly trusted that the House would allow it to pass. In a short speech, the points of which we need not recapitulate—for it dealt with the same facts and came to the same conclusion as those speeches of previous Chancellors already described,—he proposed the first reading. Then came the dissolution of Parliament, and its forcible postponement for one more session.[97]

In a fortnight from the meeting of the new Parliament Sir G. Lewis, true to his promise, moved that the House go into Committee on the Savings Bank Bill, which had even then reached that stage. His motion was, “That it is expedient to amend the laws relating to Savings Banks, and to provide for the establishment of Savings Banks with the security of the Government.” The Chancellor said that almost everybody was agreed as to the principles of the bill, though it was true that the managers of many Savings Banks contested some of the details. The greatest objection to the bill when last introduced being the provision to limit the total amount of deposits to 100l., he would now propose, as it did not affect the bill at all materially, to drop that clause; the law to remain as it then stood. This was the only material difference; there were minor points, but they were not worth pointing out. He then went over the changes which the bill proposed to make in the law; the ample security he wished to give to all who deposited money in Savings Banks, at the same time taking no superfluous securities and imposing no unnecessary restrictions in order to guard the interest of the public. Should the local authorities of Savings Banks still be found unwilling to part with their own control, or admit any interference on the part of the Government, there was only one course left to him—namely, “to abandon the bill,” to leave things in their present position, and continue a system by which the depositors are left entirely to the security of the local officers; while at the same time Government is left wholly irresponsible, except for the amounts actually lodged in its hands. “I trust, however, that the plan will be considered a reasonable plan,” said the Chancellor, in conclusion, “that it will be found not to impose upon the local authorities any shackles of which they can reasonably complain, and that no securities are demanded on behalf of the public beyond what are absolutely necessary.”[98] Sir Henry Willoughby held that the law needed consolidating before any new Act was passed. It was not long since 200 petitions were presented to the House for a consolidation of existing statutes, and an inquiry into the entire system. Let the House take this step first. After speaking warmly on the subject of the disposal of Savings Bank money, he appealed to the Chancellor to refer the whole subject to a Select Committee, who should recommend a clear and well-defined legislative enactment. Mr. Sotheron Estcourt and Viscount Goderich took the same view; the former gentleman, however, warmly approved of the Government bill, which had “happily been re-introduced,” and thought that “most of the alterations made were improvements.” As a trustee of a Savings Bank he would consider his position infinitely improved by the bill. If, however, the feeling of the House was for a committee, this course could not prejudice the bill, though it would delay it. Mr. Thomas Baring thought the matter should go before a Select Committee; so did Mr. Henley. The Irish members, Mr. Slaney and others, were for passing the bill, and not deferring legislation any longer on any pretence. The Chancellor of the Exchequer opposed any further delay; the adoption of any other resolution would simply tend to shelve the bill for another session. If honourable gentlemen really wished to reject the bill, let them resort to the direct and fair course of doing so. He also was for consolidating the laws relating to Savings Banks; but till that could be done he thought it by far the best plan to introduce a few more clauses into the law to remedy grievances which could not wait to be redressed. The motion was then agreed to. The second reading came off on the 8th of June. Mr. Ayrton, in a long and animated speech, during which he said that the greater number of Savings Banks were now most efficiently managed on a principle which was most conducive in binding the humbler to the more influential classes, and that he could conceive nothing more calculated to destroy that sympathy than the present proposals—“felt inclined to move that the bill be read a second time that day six months.” The result of the proposals would be a step in the direction of the system which obtained on the Continent, where every function of the community was usurped “by what was called the civil service of the country.” Amidst cries of “Divide,” Mr. Ayrton said he was strenuously opposed to any such system. Mr. McCann said the whole body of the people were unanimous in applauding the measure of the Chancellor of the Exchequer. Sir Harry Verney approved of the principle of the bill, but said he would like to see the subject referred to a Select Committee. Mr. Barrow opposed the bill and the Select Committee also. Mr. Estcourt again, in an admirable and temperate speech, during which he showed an excellent knowledge of the subject in all its bearings, assisted the Government in their proposals. To give the reader a proper idea of the ground taken by Mr. Estcourt, who, when the committee was eventually appointed, was made chairman of it, we need only give the concluding part of his speech on this occasion:—

“He earnestly wished that this session would not pass without a Government Savings Bank bill becoming law, and he hoped the honourable gentleman would persevere with this bill; but even should the bill pass, he joined his voice with that of others in entreating the Government, after giving the poor man the guarantee which he did not now possess, to give to the public generally more accurate information on the whole subject, a clearer account of how the money was applied, and how the deficit spoken of had arisen. That information ought to be given, if only for the purpose of showing the groundlessness of the suspicious observations made against this bill; and therefore, though he heartily concurred in giving his voice for the second reading, he joined with other gentlemen in entreating the Government to give them a Select Committee, not in order to shelve the bill for the session, but, next year, for the purpose of assisting the Government, and giving the public that information which they ought to have.”

Mr. Glyn and Mr. Maguire approved the bill without reference to a Committee, one of these gentlemen submitting that the Committee could sit on the general subject after the bill had passed into law. In reply, Sir George Lewis took the latter view, and said he would be glad to give every facility to the Committee in that case.[99] After demolishing the man of straw which Mr. Ayrton had set up, the bill was carried without a division. So far things went on prosperously, but the opposition gathered in strength; Savings Bank managers again took the matter up, and urged, by petition and otherwise, that nothing should be done till a Committee inquired into the matter, and a bill be founded on the result of their investigation. The Chancellor of the Exchequer appointed several nights on which to proceed with the bill, but each night there were so many notices given of motions with regard to the subject—generally twenty or thirty—that the Government were compelled by the pressure of other business again and again to defer the consideration of it, and ultimately to withdraw it. In reply to Mr. G. A. Hamilton, the Chancellor said, on the 21st of August, 1857, that he had come to this latter conclusion mainly from the considerable misunderstanding existing among the local administrators of Savings Banks. He thought his proposals had not received the approbation which he conceived their merits justified.[100] He would offer no pledge for the future, however, further than this, that if the House next session appeared to wish for a Select Committee, he would agree to the appointment of one.

The House of Commons met in the November of the same year, when the question being again raised, Sir George Lewis gave notice that immediately after the holidays, he would propose a Committee of Inquiry, who should be instructed to go into the entire subject. The Committee which was appointed on the 9th of February, 1858, “to inquire into the Acts relating to Savings Banks and the operation thereof,” consisted of the following members:—Mr. Sotheron Estcourt (Chairman), Mr. Bouverie, Mr. Ayrton, Viscount Goderich, Sir Henry Willoughby, Mr. Bonham Carter, Mr. E. Egerton, Mr. Fagan, Mr. Cowan, Mr. Grogan, Mr. J. A. Turner, Mr. Henley, Mr. Whitbread, Mr. Bramstone, Mr. Adderley, Mr. Gregson, and Mr. Thomas Baring. They sat twenty-one days, and examined Sir Alexander Spearman, Mr. Tidd Pratt, Lord Monteagle, Mr. C. W. Sikes, Mr. John Craig; and the following eminent actuaries or other officials of the principal Savings Banks in the kingdom:—Mr. Edward Boodle, of the St. Martin's Place bank; Mr. Shopland, Exeter; Mr. Wortley, Finsbury bank; Mr. Saintsbury, Moorfields bank; Mr. J. Hope Nield, Manchester; Mr. Maitland, Edinburgh; Mr. Meikle, Glasgow; Mr. Sturrock, jun., Dundee; Mr. Jameson, Perth; Mr. D. Finney, Marylebone bank; Mr. Hatton, Brighton; Mr. Deaker, Dublin. Mr. W. H. Grey, a Government actuary, and Mr. Edward Taylor, of Rochdale, attended to give evidence on the subject of Savings Bank frauds. The Committee, as might be expected, from this imposing array of names, collected a most interesting and important body of evidence, and presented, pretty unanimously, an extremely exhaustive and important report to the House.

Upon the report of this Committee we shall have to draw pretty largely in more than one succeeding chapter, and will therefore content ourselves with describing briefly the general nature of the evidence, and with giving a summary of the Report presented with that evidence to the House. Further on in the present chapter we propose to attempt some account of the arguments used in the Committee with regard to the investment of Savings Bank money, when, two years later, a bill founded on the recommendation of the Committee was brought before the House of Commons, where the subject was warmly discussed. In this way, all the important conclusions come to by the Savings Bank Committee will at one time or another be fairly noticed. The evidence itself may be classified as follows. Mr. Tidd Pratt came on first, and gave information of the course of legislation on the subject, and in other ways the results of his long experience in such matters. Sir A. Spearman gave a full account, in an examination lasting over four days, of the mode in which investments were made at his office, and of the principal financial operations connected with these investments. Lord Monteagle, by permission of the House of Lords, attended and gave the Committee the benefit of his long and intimate acquaintance with such financial subjects. Mr. Boodle, who took the lead of the actuaries, and who, while falling into several inaccuracies, showed perhaps the greatest practical acquaintance with the subject in all its different bearings, described not only the manner of conducting the St. Martin's Place bank, but conveyed to the Committee the prevailing impressions of Savings Bank officials on the subject of the investment of their capital. Mr. Craig, of the Bank of Ireland, explained at length his system of book-keeping, and humorously described its introduction into the Cork Savings Bank. The other actuaries described the peculiarities of the different banks they represented; described frauds, and spoke of checks which had been devised for preventing their recurrence; and gave their opinion, which will be seen subsequently to have been anything but unanimous, on such disputed points as the limits of deposits, the rate of interest, making the audit, and regulating the expenditure. Few of the witnesses left the box without offering some practical suggestion, or recommending something of value. All the gentlemen agreed as to the necessity of doing something. Most of them thought an independent Commission should be appointed to manage the affairs of Savings Banks. Every witness expressed his opinion that the one thing needful was a Government guarantee for the absolute safety of all deposits; and although Mr. Craig and others thought that this should be supplemented by a staff of Government inspectors, regarded the change as imperatively required.[101] It is impossible, however, that we can at any greater length give the recommendations which were made on this and other important matters of which the witnesses spoke. Nor indeed can we do more than condense into the fewest possible words the full and voluminous Report which the Committee made on the occasion. Seeing that the demand for this Committee was so great, that so much pains were taken to arrive at a just conclusion, and that the Report itself was not without its effect on the institution of Savings Banks, we doubt not that we shall be readily excused for giving prominence to it, and for presenting the resolutions in which the principal points of recommendation are embodied.[102]

1. That the laws relating to Savings Banks in the United Kingdom require to be amended, and to be consolidated in one Act.

2. That it is expedient to place the superintendence and management of the general funds of the Savings Banks in a Commission consisting of five members.

3. That it is desirable that this Commission be constituted of the Chancellor of the Exchequer, the Governor of the Bank of England, and three other persons appointed by the Crown, all of whom shall be paid.

4. That all expenses of the Commission be paid out of the moneys of Savings Banks; that the surplus fund shall be invested in public securities, and the interest carried to the account of the surplus fund, out of which such expenses shall be defrayed.

5. That the powers and duties of the Commission shall be defined by Act of Parliament; that provision be made for the summoning and holding, at stated intervals, the meetings of the Commission; that three shall be a quorum; and the minutes of each meeting duly recorded and signed by the Chairman.

6. That the Rules and Regulations relating to the receipt and payment of all moneys, and to the purchases and sales of stocks and all securities, be passed at meetings of the Commission specially convened for that purpose, and shall be subject to the approval of the Lords Commissioners of Her Majesty's Treasury.

7. That the annual accounts of the Commission, containing the receipts and payments of all moneys, and every detail as to the sales and purchases of stocks and other securities belonging to the Savings Banks, within the year ending on November 20, in each year, be audited by the Commissioners of Her Majesty's Audit.

8. That monthly accounts of the receipts and payments of all moneys, and of sales and purchases of stocks and other securities, be prepared by the Commissioners, and copies of the monthly accounts shall be forwarded to the Lords Commissioners of Her Majesty's Treasury, and to the Governor of the Bank of England, within one week of the following month.

9. That the annual accounts, containing the receipts and payments of all moneys, and every detail as to the sales and purchases of stock, and of other securities of the Savings Banks, be laid before both Houses of Parliament in the first week of February, if Parliament is sitting; and, if Parliament is not sitting, then within ten days next after the first sitting of Parliament.

10. That no sales, purchases, or exchanges of stocks or securities held by the Commission shall be made, except as required for the purposes of the Savings Banks, and that no funding of Exchequer bills held by the Commission shall in future be made without the special authority of an Act of Parliament.

11. That the Commission should be empowered by Parliament to invest a portion of such funds, not exceeding one-third of the whole, in other securities than those now authorized to be purchased with those funds; those securities being such as are created or guaranteed under an Act of Parliament.

12. That it is inexpedient that any existing deficiency of the funds should be made the ground of reducing the present rate of interest allowed to the banks, but the whole subject of the estimated deficiency be referred to the consideration of Parliament.

13. That any future surplus income of the Board shall be carried to the credit of a guarantee fund, to meet any casual charges, losses, or deficiency of income; but if there shall be no surplus to meet such deficiency of income, the rate of interest allowed to Savings Banks shall be proportionately diminished.

14. That the Commission shall have power to frame regulations respecting the accounts to be kept, and the audit thereof, and respecting the receipt and payment of deposits, on the adoption whereof by any Savings Bank such bank shall acquire security for the deposits therein guaranteed by Parliament, and that such Savings Bank shall have a special title.

15. That the Commission may appoint such officers as may be requisite for the proper audit and inspection of such accounts, and for obtaining due compliance with such regulations.

16. That no banking concerns should be permitted to assume the name of Savings Banks, except such as have had their rules duly certified.

17. The rules of every Savings Bank shall be in force only after they have been certified by the Barrister, to whom no fee shall be payable.

18. That the responsibility of trustees be enacted in the same terms as in the Act 9 Geo. IV. c. 92.

19. That the present limits of yearly and total amounts of deposits payable on demand be maintained.

20, and last. That whenever any deposit shall amount to 150l., the Commissioners may, with the consent of the depositor, invest a portion of that deposit in the purchase for the depositor of 100l. stock, the interest on which shall be received by the Commissioners and placed to the depositor's account.

Arrived at this point, and in order that the general reader may properly understand the next attempt made at legislation on behalf of Savings Banks, we ought to say something in the way of explanation as to the disposition of the funds of Savings Banks after they reach the hands of Government. By the 57 Geo. III. c. 105, the money paid in on Savings Banks account was to be invested in Three-and-a-half per Cent. Bank Annuities.[103] Subsequently, the law was altered, by which the money might be invested in Bank Annuities or Exchequer bills. The purchases of Stock are made upon the order of the Comptroller-General by the Government broker; but no Exchequer bills are bought, except under the special direction of the Chancellor of the Exchequer. The practice is, when the balance at the bank appears to be larger than is necessary, gradually to apply it to the purchase of Stock at the price of the day. It appears that between 1828 and 1844 Stock was sold to the amount of 8,166,511l., and purchased to the amount of 8,816,400l.; Exchequer bills were bought to the amount of 19,888,100l., and sold to the extent of 13,041,500l. Sir Alexander Spearman stated that he had, on his own authority, bought Stock from time to time, as the state of the balance required it; he contended that he had legally such authority by virtue of his office, and he did not hold himself responsible to give any explanation of his proceedings to the trustees or managers of banks.[104] This was just what Savings Bank managers and trustees did not agree with, and it was an interpretation put upon the statute which even experienced statesmen disputed.

Mr. Wortley told the Committee of 1858 he considered the system of mixing up the Savings Bank funds with the Government money very injurious to Savings Banks. Mr. Boodle strongly objected to the practice of dealing in Stock and Exchequer bills, and of exchanging one for the other. He said Mr. Goulburn had been induced to discontinue the practice, and to publish an account of the different transactions, but that the practice had been revived in 1853, had continued ever since, and in a worse form than ever. Lord Monteagle, who spoke very strongly on these points, stated that the present use of Savings Bank money was entirely at variance with the original design; that the Commissioners had no power to change the securities, and thus become active agents in the Stock Market.[105] Lord Monteagle expressed strong objections also to the power of funding Exchequer bills bought for the Savings Banks at the price of the quarter at which they were bought. Sir A. Spearman, who was somewhat unfairly left to bear all the brunt of every attack of this kind, on account of the Committee neglecting to call upon any of those five members of the House who were or had been Chancellors,[106] stated that the Savings Bank fund on the 20th of November, 1857, was 34,399,082l. Stock; whereas, if there had been no investment in Exchequer bills or bonds since 1853, the amount would only have been 34,207,371l. Stock.[107] Mr. Boodle dwelt upon the reputed losses which the country had sustained through the Savings Banks, and declared that if there had been any loss, it had been occasioned by the State not treating the funds exclusively as Trust Funds. In this matter, Mr. Boodle undoubtedly had the best of it. “Whenever any bill is introduced into Parliament on Savings Banks,” said this gentleman, “this loss is thrown in the teeth of Savings Banks, and used as an argument, sometimes for reducing the rate of interest, at other times for reducing the limits of deposits, either annual or in gross. Therefore, it acts most detrimentally to the depositors; and it has gone out that the Savings Banks are an enormous expense, whereas we are perfectly satisfied that, if this money were properly administered, there would be no expense whatever.[108]”

That Savings Bank money was not only used for financial purposes, but turned to extremely profitable use, there can be no doubt: hence complaints of loss could only be made by persons but partially acquainted with the facts. Mr. Hume indeed, had he been cognizant of the profitable way the funds were used, could scarcely have complained about the loss to the State so often as he did. Mr. Gladstone at this time, and subsequently, never missed an opportunity of putting the matter on the proper footing, and to set it forth that, instead of a loss, the funds had been a source of considerable gain to the State. In 1834, when Lord Althorp was Chancellor of the Exchequer, and Lord Monteagle himself (as Mr. Spring Rice) Secretary of the Treasury, they determined to reduce the interest on the Four per Cents. Those who held money in the Funds and were dissatisfied with the reduction were paid off out of the Savings Bank money (without which, indeed, the reduction could not have been earned through), and a saving to the country of 53,000l. a year was the result. Mr. Goulburn, using the power he had in the same way, or with the money of Savings Banks to fall back upon in case of need, effected a saving of 750,000l. a year in reducing the rate of interest from four to three and a half, then to three and a quarter, and eventually to three, per cent. Not less useful were the funds of Savings Banks in the time of the Crimean War. By means of Ways and Means bills, the Chancellor of the Exchequer raised the necessary funds to meet the heavy demands, and thus effected an enormous saving of money, which would have been sunk in transacting a loan.

We have already made the reader acquainted with Mr. Gladstone's opinion on the right of the State to use the money entrusted to it for safe keeping; nothing could be more vigorous than his language already quoted. Mr. Gladstone endeavoured to carry a change in the law relating to the investment of Savings Bank moneys in 1855. He now, in the session of 1860, came forward and offered a bill to remedy some of the grievances complained of in the Committee. His proposals were now substantially the same as those of 1855. He voluntarily proposed to be shorn of his strength as Chancellor by the House agreeing to cancel Savings Bank Stock to the amount of thirty-one millions of pounds; and to open a new account for this money, to be called “State Deposit Account, No. 1,” virtually giving the money the fullest security of the State, and placing it entirely beyond the reach of his operations. The remaining amount, then about ten millions, Mr. Gladstone proposed should be allowed to be invested at the pleasure of the finance minister as heretofore. One would have thought that at any rate this bill would have been allowed to pass quietly; but it was not to be. The bill proposed was based on two of the recommendations of the Committee of 1858,—namely, those which suggested that the power of funding Deficiency and other bills should be done away, and that the dealings in the stocks should be under the review of the House; but members complained that a bill had not been prepared to embrace all the recommendations. Sir H. Willoughby and Mr. Estcourt took this view. In long speeches they both upheld the decision of the Committee, and asked for a bill dealing with the entire subject; the latter gentleman said that the “barren discussions in Parliament were acting to the prejudice rather than to the support of the excellent institutions with which they dealt. There were not above 600 of these useful institutions in the whole kingdom, whereas they ought to ramify through every parish and every village of the kingdom.” Mr. Malins and Colonel Sykes followed, and complained that Government should have neglected to deal with the entire subject. Mr. Gladstone made up for the lack of supporters by a long and able speech. He admitted that it was most desirable to have a bill for the management of Savings Banks, but the general subject had no relation to the mode in which the money of Savings Banks was invested. Better at the end of a session carry one or two points, and put an end to grievances which had been loudly complained about, than bring in a measure only to withdraw it again. He had been charged with ignoring the labours of the Committee. He had not done so, for the bill was founded on part of their labours; he had considered the report, “but consideration does not necessarily involve adoption.” He was compelled to decline many of the suggestions of the Committee. Where, however, he agreed with them, he had lost no time in taking action: hence the proposed bill. “From speeches of honourable gentlemen,” concluded Mr. Gladstone, “it might be supposed that a dreadful bill had been introduced, giving exorbitant powers to the Chancellor of the Exchequer. The fact is, however, that there is not a power given which he does not already possess, and in one or two respects the surrender of powers is very large.” “It is impossible that Savings Bank funds can now be used by Government as a trust; they must be reserved for the discretion of the House.” The bill for the first time gives a positive title in law to the deposits in Savings Banks, and it will further provide a true account,—“for nobody has ever yet seen a true account,”—of the National Debt; and for these reasons Mr. Gladstone hoped it would be allowed to pass into law. Mr. Thomas Baring, and Mr. Ayrton, unconvinced by the Chancellor's arguments, opposed the bill; and Mr. T. Collins contented himself, as usual, with dividing the House on his motion to throw it out. The motion was negatived by a majority of twenty-four, and there was a similar majority on a motion for adjournment made by Sir Henry Willoughby. On the 20th of July, 1860, the bill was considered in Committee, and the discussion was taken on the first clause—the existing stock to be cancelled—when Mr. Hubbard approved of the measure. By the bill the greater part of the money of Savings Banks, viz., that treated as a book debt, would be placed beyond the reach of jobbery. Sir Francis Baring spoke in favour of, and Sir H. Willoughby, Mr. Hankey, and Colonel Sykes again opposed, the clause. The opposition to the measure had gathered strength since the last occasion;[109] and on a division, the Savings Bank managers once more triumphed by a majority of 38, in a morning sitting and a House of 192 members.

A few days afterwards the Chancellor of the Exchequer proposed the fourth clause of the defeated bill, or that which gave the Commissioners an uniform power of holding and dealing with all stocks under Parliamentary guarantee, and stocks and securities, under whatever name, that constituted the National Debt. At present, Mr. Gladstone stated the Commissioners had power to hold Terminable Annuities, but no power to sell them. There ought to be a uniformity of power with regard to these securities, and this bill, which was founded on the fourth clause, gave it. He had only been induced to take the matter up again by finding an unanimous feeling in the House for this proposition. Mr. Estcourt, in speaking for the clause, hoped the Chancellor would soon bring in a measure on the general subject. So he did, soon afterwards, but not the kind of measure Mr. Estcourt desiderated. When this bill reached the Lords, it was rather violently opposed by Lords Monteagle and Redesdale; and on a division the voting was found to be equal. According to usage, the bill was thrown out. The Government, however, re-introduced the measure, “as a matter of urgency;” and though there was an outcry in the Lords against it, no less than in the Commons, for interference with what was considered a Money Bill, the clause passed, and received the Royal Assent on the last day of Parliament.