"To rest from toil our Great Untaught,And soothe the pangs his warlike brainMust suffer when,unused to thought,It tries to think, and—tries in vain."
Sir Joseph Yorkeembraced 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 The statute was entitled,“An Act to consolidate and amend the Laws relatingto Savings Banks,”and repealed all other Acts previously in force.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 commonlywould 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 theoldest 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 Althorpnow 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 oflabour, 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 bankstill 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 thatLord Liverpool's great object in getting up these banks was to get his claw in the people.”Lord Althorpreplied 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 realizeprofitby 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. Slaneythought 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 morelikely 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 theoriginal 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 committeeof 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 paidin moneysince the establishment of Savings Banks and, on the other hand, the interest which had been credited to depositorsand 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”thatexpenses 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 theRegisterof 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 inHansard. Third Series. 1816.
[30]Act 57 GeorgeIII.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 GeorgeIV.c. 83.
[35]5 GeorgeIV.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 GeorgeIV.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 WilliamIV.cap. 57.
[43]The Westminster Reviewof 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.
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.
Arrivedat 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 renderto 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 tothe 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 andtalked—the naughty rogues.' Yes, and even politics too! And it might have been added,”continues the writer and proprietor of theRegister,“that they very frequently heard one of their number read—theRegister!”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 projectthat ever entered into the mind of man.”Another personof 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 labourersin 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 ofthe 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, theTimesnewspaper 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 applicationto 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, andvice 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 thecondition 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 andagree 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 certaintime, 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 theaverage 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 anenormous 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 faras we are concerned, in a literal sense. The circumstance can be only too well explained. TheQuarterly Reviewof 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 petitionsfor 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 andCo.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 SavingsBank 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 orderto 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, theprogress 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, or1835, 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:—