CHAPTER III.. Early Legislation on Savings Banks--1817 to 1844.

EARLY LEGISLATION ON SAVINGS BANKS--1817 TO 1844.

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

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

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

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

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

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

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

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

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

+---------+--------------------+------------------+-----------------+ | | Dividends on Stock | Interest Paid | | | Years. | Received by | Trustees. | Difference. | | | Commissioners. | | | +---------+--------------------+------------------+-----------------+ | | £ s. d. | £ s. d. | £ s. d. | | 1817-18 | 32,071 1 5 | 44,909 5 1 | 12,838 3 8 | | 1819 | 92,865 13 7 | 106,963 4 9 | 14,097 11 2 | | 1820 | 124,278 8 2 | 141,488 1 3 | 17,209 13 1 | | 1821 | 163,631 1 1 | 182,649 13 3 | 19,018 12 2 | | 1822 | 225,252 6 1 | 253,629 4 11 | 28,376 18 10 | | 1823 | 298,270 10 1 | 340,757 0 2 | 42,486 10 1 | | 1824 | 379,411 6 7 | 468,261 12 1 | 88,850 5 6 | | 1825 | 450,027 13 0 | 562,759 0 4 | 112,731 13 4 | | 1826 | 478,286 5 3 | 592,390 18 11 | 114,104 13 8 | | 1827 | 480,851 13 0 | 615,516 1 7 | 134,664 8 7 | | 1828 | 515,569 9 4 | 675,753 16 7 | 160,184 7 3 | +---------+--------------------+------------------+-----------------+

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

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

Sir Joseph Yorke embraced the opportunity to compliment the Chancellor, amidst great laughter, on being such a "valuable auxiliary of the 'Great Untaught.' The right hon. gentleman evidently was not one who spoke on the strength of two bottles of wine: his eloquence was certainly not of a fiery description;" and more banter of the like description. Mr. Lewis, however, withdrew his amendment, as did also Mr. Hume, who, when the amount of interest which should be given was discussed, had proposed that, in place of a reduction from 3d. to 2-1/2d. per diem, the interest on deposits should only be at the rate of 2d. per diem. The bill was only further opposed in some trifling particulars and, when finally carried, was ordered to come into operation in the November of the same year. The statute was entitled, "An Act to consolidate and amend the Laws relating to Savings Banks," and repealed all other Acts previously in force. From this circumstance, the clauses of the bill of 1828 are generally known as the "Governing Statutes" relating to Savings Banks. As the great majority of these clauses are still in force, it will suffice, when we come to give the present Act, to simply mark those which were originally passed in 1828, and so distinguish them from the clauses passed in 1863. We will here give the principal items and arrangements of the new bill. The Act provided that the rules of every Savings Bank should be entered in a book, which book should be deposited with the Clerk of the Peace: the Clerk of the Peace was directed to submit this book to a barrister, who, under the terms of the Act, would be appointed by the National Debt Commissioners. The duty of the barrister would be to certify that the Rules of the proposed bank were strictly according to law, and this certification, after it had been made, was to be laid before the Justices of the Peace in Quarter Sessions, who were empowered under certain circumstances to reject the same, or any part thereof. If admitted, as they most commonly would be, after certification, the Rules became binding on depositors and officers. The interest to be given to depositors, as we have already stated, was reduced by this Act from 4l. 11s. 3d. per cent. per annum, to 3l. 16s. 0-1/2d. per annum. It was provided that savings of Minors might be invested, and that deposits might be made by married Women. Charitable Societies were again authorized to invest sums not exceeding 100l. per year, or 300l. in the whole. Friendly Societies were also authorized to subscribe any portion of their funds into Savings Banks, but a Friendly Society enrolled after the date of the bill could not invest more than 300l. principal and interest included. Trustees were not to receive from any one depositor more than 30l. in any one year, nor more than 150l. in the whole and, when the deposit and interest amounted to 200l. interest was to cease. Depositors might withdraw their money and again subscribe, providing they did not do it to a greater extent than 30l. in any one year. Deposits might be withdrawn from one Savings Bank and placed in another. Should a depositor die leaving any sum exceeding 50l. the same was not to be paid without probate or letters of administration. Administration bonds for effects under 50l. were exempt from stamp duty. Section nine exacted that no Trustee or Manager should be responsible except for his own wilful neglect or default; and finally, and a matter of considerable importance, the bill provided that once in each year the Trustees of every Savings Bank should make a Return to the National Debt Office, in which a full Financial Statement should be made of the condition of the bank; and a minor clause enacted that depositors should be entitled, on payment of one penny, to a printed copy of this Annual Statement.

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

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

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

Nothing further was done in the way of legislation for Savings Banks till 1844, so we will close this chapter by referring to another attempt made by Mr. Hume, in 1838, to reduce the interest given to Savings Banks, and to introduce other changes into their organization. And here we cannot forbear to state our belief, that, though many thought very differently at that time, Savings Banks, the working classes, and the country generally, had not a better friend than Mr. Joseph Hume. He saw a lavish expenditure going on in connexion with Savings Banks, and he endeavoured to stop it; with what success remains to be seen. He saw that in consequence of this expenditure, or the inducements which it gave, legislative enactments were openly set at defiance by well-to-do people, who, besides their own deposits, made fraudulent investments in the names of the various members of their families, or their friends; and that the action of the Legislature was in this way an attempt to cultivate good habits amongst one portion of the community, at the expense of promoting bad habits amongst another. Mr. Hume on this occasion reminded the House that he was one of the original founders of Saving Banks, and had always taken a deep interest in them. It was far from him to do anything to interfere with their usefulness in the country, only the country ought not to be put to large and increasing expense over them. He compared the rate of interest given before and after 1828, and now stated that on this latter rate the country lost from ten shillings to fifteen shillings per cent. on the entire amount of deposits. The average annual loss to the public up to the time he was speaking, and from 1818, had been 75,000l. If this money went to the provident poor he would not so much care; but if all was paid to depositors, that might not be the case. Of the 500 Savings Banks in existence in 1837, to whom the Commissioners paid 3l. 16s. 0-1/2d. per cent. interest, 412 of them paid to the depositors only 3l. 6s. 8d., and 88 of them paid 3l. 8s. leaving of course a large surplus, after every expense had been paid, in the hands of both sets of trustees. Hon. gentlemen might say that this surplus money was required by law to be invested in the Surplus Fund account at the National Debt Office; but the act, in leaving it to the trustees to say what they themselves deemed "surplus," defeated its own ends, and without doubt had opened a door to fraud. Mr. Hume made a motion that the House at its rising should go into committee on the 9th Geo. IV. c. 93, which fixes the rate of interest to be given, and to permit the Chancellor of the Exchequer to reduce that rate to an equality with that which is received in the public funds. He thoroughly believed that the security afforded by Savings Banks was a matter of far greater importance than the amount of interest which was paid. Mr. Hume then referred to a subject which was made matter for great discussion, and which a committee of the House of Commons treated at great length some years subsequently. This was the power which was supposed to rest with the National Debt Commissioners, of using Savings Bank money for the exigencies of the State; "the dangerous power," as Mr. Hume characterized it, "to change the money they had in charge from funded to unfunded debt." He said the Commissioners had paid thirty-five millions sterling from 1817 to 1838, for the purchase of Stock and Exchequer bills, and had received from the sale of Stock and Exchequer bills seventeen millions, leaving more than a similar amount then standing in their names. He urged, "that as the whole of the deposits were by law payable in cash, and that as sums under 10,000l. could be demanded in five days, and even larger sums at fourteen days' notice, the public might in a time of panic, such as they had recently passed through, legally make demands of cash, and so produce a heavy loss to the Government, and greatly inconvenience, if not endanger, public credit." He gave a recent example, taking five months of the year 1832, when the country was at its greatest height of political ferment. The money transactions of the English Savings Banks in

Deposits. Withdrawals. £ £ March 1832 were 46,841 93,947 April " 33,447 107,534 May " 28,345 114,677 June " 25,515 368,976 July " 47,574 140,682

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. In the commercial panic of 1825, the total amount withdrawn was 361,000l.; in the political panic of 1832, 550,000l.; in 1828, when the interest was reduced by 14s. per cent., no less a sum than 1,500,000l. was withdrawn. The Chancellor would not say that under no possible circumstances should a reduction take place; a time might come when it might be done wisely and discreetly, though he believed it would never take place without creating some degree of uncertainty and risk. The depositors in Savings Banks were not the class to be experimented upon, and he would not have it said of him by persons out of doors that he had commenced reductions in the public expenditure by cutting down the interest payable to the poorer classes, who, after all, he believed, were the principal investors in Savings Banks. One other little item of statistics Mr. Rice gave before he sat down, which is very interesting, and much more convincing than his other arguments. He gave, from a Return which we have not been able to find, the amount of interest which had been paid in money since the establishment of Savings Banks and, on the other hand, the interest which had been credited to depositors and made into principal. In the former case it was 286,000l.; in the latter, or interest made principal, it was 9,271,000l. Finally, the Chancellor believed, that to pay depositors interest at the rate of the value of money in the market would be a death-blow to Savings Banks altogether! If Mr. Hume, in his pursuit of economy, tried to enforce it by dividing the House on the subject, his duty would be to resist. Mr. Goulburn, as the spokesman of the Opposition on financial subjects, condemned the proposition as likely to cause distrust amongst all classes connected with Savings Banks. So far from thinking that the interest ought to be reduced, or could be reduced, with safety--and this remark is curious, viewed in the light of subsequent events--"it was only by great care and good management on the part of those who superintended such banks" that expenses could be paid. Time, however, works wonders, and among other things, brings its revenges. The financial reformer, who from the first had the best of the argument, had not long to live to see a change, and to find that change brought about under the direct auspices of one who only six years before, in the words just quoted, had strenuously opposed his motion. We must leave Mr. Goulburn's bill of 1844 to be described in a subsequent chapter.

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

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

Act 57 George III. c. 130.

Hansard's Debates, vol. xli. page 1392.

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

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.

1 George IV. c. 83.

5 George IV. c. 62.

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

Times, March 13, 1828.

9 George IV. c. 92.

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.

Times, April 17, 1833.

Hansard, vol. XVII. Third Series. 1833.

5 & 6 William IV. cap. 57.

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

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