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[36] 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:—
| Years. | Dividends on Stock Received by Commissioners | Interest Paid Trustees. | Difference. |
|---|---|---|---|
| £ 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.[37] 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.[38] 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 2½d. per diem, the interest on deposits should only be at the rate of 2d. per diem. The bill was only further opposed in some trifling particulars and, when finally carried, was ordered to come into operation in the November of the same year. The statute was entitled, “An Act to consolidate and amend the Laws 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.[39] The duty of the barrister would be to certify that the Rules of the proposed bank were strictly according to law, and this certification, after it had been made, was to be laid before the Justices of the Peace in Quarter Sessions, who were empowered under certain circumstances to reject the same, or any part thereof. If admitted, as they most 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. 0-½d. per annum. It was provided that savings of Minors might be invested, and that deposits might be made by married Women. Charitable Societies were again authorized to invest sums not exceeding 100l. per year, or 300l. in the whole. Friendly Societies were also authorized to subscribe any portion of their funds into Savings Banks, but a Friendly Society enrolled after the date of the bill could not invest more than 300l. principal and interest included. Trustees were not to receive from any one depositor more than 30l. in any one year, nor more than 150l. in the whole and, when the deposit and interest amounted to 200l. interest was to cease. Depositors might withdraw their money and again subscribe, providing they did not do it to a greater extent than 30l. in any one year. Deposits might be withdrawn from one Savings Bank and placed in another. Should a depositor die leaving any sum exceeding 50l. the same was not to be paid without probate or letters of administration. Administration bonds for effects under 50l. were exempt from stamp duty. Section nine exacted that no Trustee or Manager should be responsible except for his own wilful neglect or default; and finally, and a matter of considerable importance, the bill provided that once in each year the Trustees of every Savings Bank should make a Return to the National Debt Office, in which a full Financial Statement should be made of the condition of the bank; and a minor clause enacted that depositors should be entitled, on payment of one penny, to a printed copy of this Annual Statement.
For several years after the thorough change which we have just described, the institution of Savings Banks increased and prospered wonderfully; up to the year 1833, we find that no steps were taken, nor agitation of any sort got up, to alter the law with regard to them. In this year, some further changes took place; but if we except a slight modification which was made in the arrangements under which depositors could withdraw their money,—a longer notice being thought necessary,—nothing was done which did not place additional powers in the hands of Trustees.
In April, 1833, Lord Althorp, Chancellor of the Exchequer in the Government of Earl Grey, influenced, by a suggestion of Mr. Woodrow, introduced a bill to grant immediate and deferred annuities through the medium of Savings Banks, and to grant them on so small a scale as to place them within reach of the humblest classes. Something of this sort was undoubtedly required, and the necessity became more and more felt on account of the action of Friendly Societies. The poorer classes, it would seem, had scarcely any means of investing in pensions for their old age: although nearly 5,000 Friendly Societies had up to this time proposed to make some provision of the kind, all but thirty-nine had in 1833 entirely relinquished this class of business. It may be said that Friendly Societies gave up this business because so few availed themselves of the provision that was made. From the very constitution of these societies, however, the poor had little confidence that any one of them would last so long as to give them those benefits in their old age for which they would have to subscribe for a long term of years. Benefit Societies might be broken up at any time by two-thirds of their number; this sort of thing was constantly occurring, generally leaving 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.[40] In May the bill was carried through Parliament unaltered, but, as usual, opposed by two or three fractious members. Mr. Thomas Attwood again expressed his disapprobation of Savings Banks; and we allude to his speech with a view solely of enlivening our pages, which may over this ground of legislative enactments be dull to some readers. This gentleman stated his belief on the third reading of the Savings Bank Annuities Bill, that Savings Banks “were instituted by the late Lord Liverpool and his Government, not for the good of the people, but for three different purposes.” The first was to draw capital to London, in order to bolster up the Funds; the second was to give the Government the power of putting their hands into the pockets of the people; and the third, to enable them to scourge the people.[41] On the House showing manifest signs of disapprobation, Mr. Attwood said, “Hon. members might express disapprobation as much as they pleased, and the noble lord (Althorp) might laugh, but he firmly believed 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[42] extended the bill for consolidating and amending the law with respect to Savings Banks to Scotland, and of course the bill of 1833, which we have just described, became at the same time applicable to Scotland.
Nothing further was done in the way of legislation for Savings Banks till 1844, so we will close this chapter by referring to another attempt made by Mr. Hume, in 1838, to reduce the interest given to Savings Banks, and to introduce other changes into their organization. And here we cannot forbear to state our belief, that, though many thought very differently at that time, Savings Banks, the working classes, and the country generally, had not a better friend than Mr. Joseph Hume. He saw a lavish expenditure going on in connexion with Savings Banks, and he endeavoured to stop it; with what success remains to be seen. He saw that in consequence of this expenditure, or the inducements which it gave, legislative enactments were openly set at defiance by well-to-do people, who, besides their own deposits, made fraudulent investments in the names of the various members of their families, or their friends; and that the action of the Legislature was in this way an attempt to cultivate good habits amongst one portion of the community, at the expense of promoting bad habits amongst another. Mr. Hume on this occasion reminded the House that he was one of 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. 0-½d. per cent. interest, 412 of them paid to the depositors only 3l. 6s. 8d., and 88 of them paid 3l. 8s. leaving of course a large surplus, after every expense had been paid, in the hands of both sets of trustees. Hon. gentlemen might say that this surplus money was required by law to be invested in the Surplus Fund account at the National Debt Office; but the act, in leaving it to the trustees to say what they themselves deemed “surplus,” defeated its own ends, and without doubt had opened a door to fraud. Mr. Hume made a motion that the House at its rising should go into committee on the 9th Geo. IV. c. 93, which fixes the rate of interest to be given, and to permit the Chancellor of the Exchequer to reduce that rate to an equality with that which is received in the public funds. He thoroughly believed that the security afforded by Savings Banks was a matter of far greater importance than the amount of interest which was paid. Mr. Hume then referred to a subject which was made matter for great discussion, and which a 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 | [43] |