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 theirnumber 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 whichhave 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 consumptionof 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 beganto 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. TheTimesnewspaper, 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 theloss. 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 theTimeswas 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 termedits 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 theTimesare 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 theTimes,[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 wouldnotbe 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 solaceand a blessing to her. Once, and only once more, theTimesdeclared 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-strickenDorsetshire,”as it is called by theTimesitself—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 atSavings 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 theirresponsibility, 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 ofwilful 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 anyamount 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 hisperfect 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 thistrustee 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 theci-devantparish 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 inthe 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 wouldreceive without remarkthe 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 AnnualReturns werenot 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 triflingmatter. 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 inSavings 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' tubIs 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]Seenext 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'sHistory 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 haveextremely warm conteststhere 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.
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.
Itwill 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 DublinBank 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 the2dof 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 introducedhis 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 countryhad no rightto 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, 120linstead of 150l.[71]
A further proposition, which provided for another wide-spread evil in the same direction, was one requiring that nopersons 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, pregnantwith 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 orcashier 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 RoyalAssent 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 forgivenfor 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, andMr. 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 thatwasmade 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 ofauditorsto 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. TheChancellor 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 werelosing 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 ofthe 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 Thompsonspoke 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 placewe 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 Bentinckfelt 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 makeit 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 sourcesof 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 thevigilance 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. Cowensaid 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. TheChancellor of the Exchequeralleged 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 promptassistance 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]