A History of Banks for Savings in Great Britain and Ireland

by William Lewins

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 Interest was allowed at four per cent., and the money could be withdrawn at will.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

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

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

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

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

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

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

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

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

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