[CHAPTER XXVIII.]
PROGRESS AFTER 1859.
SAVINGS BANKS.
The plan of Post Office Savings Banks, already mentioned as having been brought before the public and the Government most prominently by Mr. Sikes, had, through the energetic efforts of Mr. Gladstone, been provided for, in the year 1860, by Act of Parliament. It was speedily brought into operation in England and Wales, and was extended early in the following year to Scotland and Ireland. As this new department was closely connected with the Money Order Office, its secretarial management devolved, in the ordinary course, on my brother; who, before proceeding to the work of organization, recommended that this should be based upon the contract system; a measure which would have been highly economical, but would obviously have involved the abandonment of patronage. This recommendation, however, did not find favour with the Postmaster-General, Lord Stanley of Alderley, and the department was soon afterwards transferred to Mr. Tilley. Together with this great measure of economy were rejected other means proposed by myself. In short, operation was made so expensive, that while a money order costs the department in issue or payment but three-halfpence, every transaction in the savings bank, whether of deposit or withdrawal, costs sevenpence.[220]
The full evil of such increase in current expense will appear when it is considered what, under strictly economical management, these savings’ banks might become. Their chief avowed object is, and most assuredly should be, to give the largest justifiable encouragement to popular thrift; and to this, as I conceive, every other aim should be completely subordinated. To this end it is important to induce, by all reasonable means, the greatest amount of deposit, but incomparably less important, if indeed at all desirable, to give more than reasonable facility for withdrawal. Certainly there is no just ground for extending and multiplying such facility at the expense of the department; especially seeing that the necessary consequence is a reduction in that rate of interest whose amount constitutes a main inducement to depositors; so that the effect is to mulct the steady depositors for the convenience of the more changeable. Had the Post Office been able to offer the same rate of interest as the old savings banks, its absolute security, combined with a reasonable and inexpensive increase of facility for the transaction of business, would not only have soon brought to it the whole actual amount of the savings bank business, but in all probability would have so extended that increase in thrift, which, with all defects, it has actually produced, as to make it correspond with the hopes of the most zealous advocates of the new scheme, and in particular of the benevolent gentleman in whose earnest suggestion it took its rise. Before the arrangements were finally adopted, I urged my views as to excess of expense and consequent prejudice to revenue, in an elaborate letter to the Postmaster-General. Some small change for the better was made, but, high as the estimate still remained, it has been exceeded by the actual expense, though the Annual Reports would seem to show otherwise.[221]
With all drawbacks, however, the institution may safely be pronounced to be a great national benefit. The number of Post Office Savings Banks in the United Kingdom by the end of the year 1861 was nearly four-fold the maximum number of savings banks existing under the old system,[222] and is now (1869) as high as six-fold.[223] It is important also to observe that the number of small deposits is more than proportionately increased; a fact obviously tending to show that this important means of thrift has been made more available to that class in which economy is at once most difficult and yet most desirable.
“‘This gratifying result,’ says the eighth Annual Report, ‘is doubtless attributable to the superior facilities given by the Post Office banks; and especially to the fact that they are open daily and for several hours, and that they are situated almost at the door of the depositor.’ ”[224]
The new institution also proves very convenient to friendly societies, charitable societies, and penny banks, which avail themselves of its benefits in considerable numbers.