ON THE PROGRESS OF SAVINGS BANKS UP TO THE YEAR 1844.
“They to whom this subject is indifferent may censure our minuteness; but those who, like us, regard the establishment of Savings Banks as marking an era in political economy, and as intimately connected with the external comfort and moral improvement of mankind, will be gratified to trace the rise and progress of one of the simplest and most efficient plans which has ever been devised for effecting these invaluable purposes.”—Quarterly Review. 1816.
Arrived at the year 1841, when Savings Banks have had a legislative existence for a quarter of a century, it may be well to stop and pass the period in review; to endeavour to show the progress made by these institutions during this time; and to exhibit, so far as we are able, their effect upon the general progress of the country. We have up to this point dealt principally with the legislation on Savings Banks, and have taken little account of what was said or done with respect to them out of Parliament, after the year 1817. At this early period there were frequent and warm discussions out of the House as to their value and utility. When they first began to attract public attention, “the friends of the working classes” were nearly equally divided between their advocacy of them and the Friendly Societies. When Mr. Rose, who had strongly advocated the formation of these societies, saw the benefit that Saving Banks were calculated to render to the poorer classes, he cordially took up their advocacy; and although he urged that there was scope enough for all societies which inculcated the duty and practice of providence and frugality, he was loudly accused of leaving his first love, and advocating the Savings Bank plan for some political purpose. We cannot give the reader a better idea of the way the industrial classes were beguiled, and the kind of influence which was only too often brought to bear upon them at this period, than by giving some extracts from a paper to which we have previously incidentally referred. In his “New Year's Gift to old George Rose,” Cobbett reminds Mr. Rose, that after all he had done for them, he had at length “left Friendly Societies in the lurch, and taken to the bubble of Savings Banks.” Cobbett, however, said that he could see through the change, and he shows the amount of his penetration by such argument as the following:—In “friendly societies Mr. Rose found that 'the members got drunk and talked—the naughty rogues.' Yes, and even politics too! And it might have been added,” continues the writer and proprietor of the Register, “that they very frequently heard one of their number read—the Register!” The object of Savings Banks, or at any rate, parliamentary interference with them, was nothing else, Cobbett considered, “than to get the pennies of the poor together, but to keep their owners asunder.” “What a bubble!” repeats Cobbett. Then addressing Mr. Rose in the first person, he tells him how, in his opinion, “the company of projectors who, in the reign of George the First, wanted a charter granted to them for the purpose of making deal boards out of sawdust, just saves you from the imputation of having, in the Savings Bank scheme, been the patron of the most ridiculous project that ever entered into the mind of man.” Another person of Mr. Cobbett's stamp, though one who aspired to greater knowledge of all questions connected with trade and currency, and who really paid closer attention to such subjects, was Mr. Thomas Attwood—“Currency Attwood,” or “Little Shilling Attwood,” as he was variously designated in some parts of the country. Whenever he could get an opportunity in Parliament to speak of Savings Banks, we have seen that he invariably clothed his ideas in a vocabulary of prejudiced invective. And he repeated himself outside the walls of the House whenever he had the chance. “Savings Banks,” we find him saying on one occasion, “besides costing the nation so much, were a nuisance;” “Savings Banks were a sort of screw in the hands of the Government to fix down the working classes to the system.” On these expressions, and others of a like tendency, as texts, those minor demagogues who went “on stump,” preached for many a day. Considering how such men treated the institution of Savings Banks, it is wonderful that they progressed as they did. That they kept many from using these institutions is beyond a doubt. Such men had a surprising power over the labouring classes, and though that power was often used for good, too often it only excited distrust and apprehension when distrust and fear were least needed and most dangerous. The true friends of the poor—and there have been many such at all times—said, in effect, “We have reason to believe that much money now spent unnecessarily might be saved for seasons of want and old age, if the poor had the means offered them of putting that money by easily, safely, and profitably. We have exerted ourselves to get such places established, we give our best exertions to have them conducted properly, and we advise all who have money to spare to intrust it to this safe keeping.” Cobbett, on the other hand, put his printers to work to say “What a bubble! At a time when it is notorious that one half of the whole nation are in a state little short of actual starvation—when it is notorious that hundreds of thousands of families do not know when they rise where they are to find a meal during the day—when of the far greater part of the whole people much more than half of them are paupers; at such a time, to bring forth a project for collecting the savings (!) of journeymen and labourers in order to be lent to Government, and to form a fund for the support of the lenders in sickness and old age!”[45] It would be idle to show the fallacy of such reasoning, even admitting the facts of the case to be as they are here stated. Suffice it to say, that in this way did such men pander to the prejudices of the uneducated. Many thousands of industrious workmen who had had no training, and who could not discriminate between real and imaginary evils, were thus too often flattered into believing that they had more than their share of the truth, honesty, and manliness of the age on their side, and that the upper classes were against them on every side and in all respects. All this is pretty well over now.[46] Just as the sun expels the mists of the morning, so have education and a free press opened the eyes of the people to their true interests, and shown them which class of men have most wished for and best worked to promote these interests.
It was not, however, only by such men as Cobbett that Savings Banks were misinterpreted and misrepresented. Like every other new and untried measure, it had to run the gauntlet of an educated as well as an ignorant opposition. It was a very usual thing to find the discussion on the utility of Savings Banks waxing warm in the most important organs of public opinion. For example, the Times newspaper early took a decided stand against Savings Banks, and tried to maintain its position, as we shall see more fully subsequently, long after the country had given them a pretty unanimous verdict of approval. Just after the period of which we are speaking, a correspondent in the then, as now, leading journal, thought himself able to trace in Savings Banks, “a great source of mischief; and that to them,”—though in what manner it is not attempted to be proved,—“may be attributed a considerable portion of the distress which has been so long felt, and which does not appear to diminish in most of the manufacturing districts.” “God forbid,” ejaculates this remarkable genius, “that I should desire to encourage improvidence amongst any portion of society; but there is a wide distinction between parsimony and extravagance, and these banks have literally made misers, and held out a bonus for them to become so.” But even this is not all: the same spirit, says our authority, which actuates a man in becoming a miser, will operate to prevent their making use of their petty accumulations. “With the habit of parsimony the mind becomes degraded, and the workhouse or an application to the dispensers of parochial relief lose their horrors.” It is almost useless, seeing that now few could be found to advocate such views, to reply to them. They are based on the assumption, which we take to be utterly erroneous, that a poor man is less at liberty to lay out his mite at interest than his richer neighbour; or that if he did so, the step was more likely to lead to his becoming a miser than his wealthier neighbour who had all his money in the funds. It is less necessary to argue the point, inasmuch as the aim of this nonsense is made quite apparent by the writer concluding with an elaborate eulogium on Benefit Societies for working men. “They could there, provide,” says he, “at a very trifling expense, against sickness, want of employment, and numerous other casualties; while, on the other hand, there would be no need to deprive themselves of the common necessaries of life in order to add to their hoard.” But here again the fallacy of the argument is clearly apparent. The allowance from a Benefit Society, then as now, in case of sickness or distress, would be, generally speaking, quite inadequate to the circumstances requiring it; and how could it possibly be more likely that a person in this situation would be more independent of parochial relief than one who had a fund of his own to look to, or perhaps a livelihood at his command. Such warfare as this went on uninterruptedly for several years; the advocates of Benefit Societies running down Savings Banks, and vice versá, not in all cases seeing that the two might exist together, and that each was well calculated to supply a want which the one or the other class of institutions did not meet. There can be no doubt, however, which institution suffered most from these discussions. The most decisive proof of the improvement which was seen in the condition and the habits of the labouring classes during the first quarter of the century was the progress of Benefit Societies from 1802 to 1820. In the former year there were 9,622 of these societies; in the latter year there were nearly five times that number. The people during this period had not improved in comforts and conveniences as they did subsequently; they progressed in the more skilful use of the same, or even diminished means. These societies made a deep impression upon the population, and in the same proportion the people were recovered from the control of their appetites and passions, and from that propensity to use without restraint those means of immediate gratification which distinguishes all ignorant people of whatever rank. Notwithstanding all this, the Friendly Societies were beset with difficulties, and in the discussions to which we have alluded their opponents made the most of them. Perhaps the well-meaning might better have assisted the poor in instructing them how to reform the management of these societies, and by showing them the principles upon which they could be most safely established. However it was, there can be no question that, either from their inherent defects or the comparison of the benefits to be derived from the one as against the other institution, Savings Banks soon took the place of Benefit Societies in the public estimation, and progressed when, comparatively speaking, the latter declined. In the evidence given by Mr. Lloyd, the founder of the Hertford “Sunday Bank,” before the committee on the Poor Law previously referred to, he assigned as one of the causes which had promoted the success of Savings Banks the evils arising from Benefit Clubs or Friendly Societies, as then constituted. “There is always,” he said, “a regulation, that when two-thirds of the members choose to assemble and agree to break up the club, they can; the consequence is, that the other one-third, the old members, who ought to be deriving an assistance during the last period of their lives from these clubs, are deprived of it.” He had known six clubs which had been broken up in this way. The following extract from a report of a committee which was appointed to investigate the rival claims of Benefit Societies and Savings Banks so admirably sums up the whole argument, and says so much with reference to both institutions which is no less true now than then, that we feel confident our readers will not object to have it reproduced here.[47] “Benefit Societies have done much good; but they are attended with some disadvantages. In particular, the frequent meetings of the members occasion the loss of much time, and frequently of a good deal of money spent in entertainments.[48] The stated payments must be regularly made; otherwise, after a certain time, the member loses the benefit of all that he has formerly paid. Nothing more than the stated payments can be made, however easily the member might be able at the moment to add a little to his store. Frequently the value of the chances on which the societies are formed, is ill calculated; in which case, either the contributors do not receive an equivalent for their payments, or too large an allowance is given at first, which brings on the bankruptcy of the institution. Frequently the sums are embezzled by artful men, who, by imposing on the inexperience of the members, get themselves elected into offices of trust. The benefit is distant and contingent; each member not having benefit from his contributions in every case, but only in the case of his falling into the situations of distress provided for by the society. And the whole concern is so complicated, that many have hesitation in embarking in it their hard-earned savings. With such disadvantages who would not rather choose the simple, secure mode of investment offered by the bank—free (as the banks were at that time) from them all? But if they must have the Benefit Society, with its contingent and distant benefits, working men should not rest here. Thousands of the working classes could well afford to pay their weekly sums to secure their sick and burial money, and yet have enough to spare to provide against the other rainy days of their life. A poor man's savings are continually liable, while in his own custody, not simply to professional thieves, but also—and there is far more danger of it—to be pilfered by himself and his family. They are often lost by being intrusted to improper hands; they are still oftener worse than lost in the ale-house or the gin-palace, and the money which properly taken care of might give the means for occasional enjoyments of a harmless kind, providing for the legitimate wants of his children, or which might support all during the intermissions of employment to which all are exposed, may be worse than squandered.”
It was thus that the institution of Savings Banks lost, by being cried down by the leaders of the people, and by the discussion which continued as to their merits; and thus that they gained, by a close comparison with the kindred institution of Friendly Societies. The loss, however, was but temporary. In ten years from the date of their legal formation the deposits in Savings Banks amounted to upwards of sixteen millions sterling, and this sum had been contributed by no fewer than four hundred thousand persons. A writer of the period characterizes the progress made by institutions such as these “as one of the most striking manifestations of virtue that ever was made by any people;” and he seems to have had some good grounds for the opinion. “For persons merged in poverty and totally deprived of education, as the English population have heretofore so generally been, it is not easy or common to have much of foresight, or much of that self-command which is necessary to draw upon the gratifications of the present for those of a future day.” And though, as we have previously seen, the money here deposited could not have been put there by persons exclusively of the industrial class, yet it is clear that many of the labouring community did possess means beyond what were needed to procure them the necessaries of life, and that these institutions exactly met the want which was felt in not having the means to safely dispose of that little surplus, and to call it in when the need arose for it. The year 1827 was the year, it will be remembered, after one of the most terrible financial crises that this country has ever passed through, and yet, though the average amount of money deposited in Savings Banks in one year before this time had only been about 1,100,000l., no less a sum than 859,734l. was deposited in 1827, and not half of that sum was withdrawn. These facts show the great hold which Savings Banks had already taken upon the country. Of what service they were during such times as those witnessed in 1826 we shall have to speak. We are far from anxious to trouble the reader with any statistical information which might easily be withheld, but the progress of which we are now speaking can be best traced by presenting first, a tabular view, which gives that progress from year to year, and which will likewise furnish material for remark.[49]
Showing the Amounts invested by Savings Banks with the National Debt Commissioners from 1817 to 1841, with the Total Capital of all the Banks at the end of each year:—
| Year ending 20th Nov. | Total amount credited to Trustees, including Interest. £ | Total Capital at the close of each year. £ |
|---|---|---|
| 1817 | 231,028 | 231,028 |
| 1818 | 1,533,812 | 1,697,853 |
| 1819 | 1,233,684 | 2,813,023 |
| 1820 | 807,825 | 3,469,910 |
| 1821 | 1,312,800 | 4,740,188 |
| 1822 | 1,849,264 | 6,546,690 |
| 1823 | 2,205,272 | 8,684,662 |
| 1824 | 3,149,151 | 11,720,629 |
| 1825 | 1,769,988 | 13,257,708 |
| 1826 | 1,131,659 | 13,135,218 |
| 1827 | 1,475,250 | 14,188,708 |
| 1828 | 1,734,374 | 15,358,504 |
| 1829 | 960,142 | 14,791,495 |
| 1830 | 1,056,584 | 14,860,188 |
| 1831 | 1,037,629 | 14,698,635 |
| 1832 | 1,099,368 | 14,416,885 |
| 1833 | 1,448,751 | 15,324,794 |
| 1834 | 1,575,016 | 16,386,035 |
| 1835 | 1,654,896 | 17,469,617 |
| 1836 | 2,006,588 | 18,934,591 |
| 1837 | 1,649,691 | 19,711,797 |
| 1838 | 2,200,663 | 21,446,341 |
| 1839 | 2,137,502 | 22,486,553 |
| 1840 | 1,949,126 | 23,549,716 |
| 1841 | 1,950,751 | 24,536,971 |
Remembering that this table does not give the actual business done by Savings Banks within this period,—which, indeed, from the absence of proper returns in the earlier years of those Banks it would be difficult to present,—many instructive lessons may be gathered from it as to their value and utility. In fact, however, and for all practical purposes, the amounts remitted by the Trustees to the National Debt Office very fully represents the progress of Savings Banks, for they may be considered as representing so much surplus every year, after all the claims on the banks had been met. The variations observable in the returns are accounted for quite easily by the state of the country at the time. When the amount falls, it may be taken for granted that the country is passing through a period of exceptional suffering and trial, and that the funds which have been patiently accumulated for times of need are thus made available when the necessity arises for it. The country was unusually prosperous, for example, in 1823-4, and an enormous surplus was returned. In 1825, as if to mark the coming storm, there is a heavy fall in deposits. In 1826, the tables were turned, not only in a figurative, but, so far as we are concerned, in a literal sense. The circumstance can be only too well explained. The Quarterly Review of that time gives a glowing account of the increased wealth of all classes, especially those of the trading community.[50] “The increased wealth of the middle classes is so obvious, that we can neither walk the fields, visit the shops, nor examine the workshops and storehouses, without being deeply impressed with the changes which a few years have produced. In the agricultural districts we do not, indeed, see such great strides, but we see universal advancement.” Then we have the familiar record of the exportation of gold; of the Bank of England and provincial banks deluging the country with notes.[51] Money became so abundant that a terrible rage for speculation set in; joint-stock companies with unlimited liability were projected for every imaginable object. On the reorganization of the South American republics, which had just then been effected, all sorts of proposals for mines were started; the El Dorado had to be found now, if ever.[52] In the session of 1825, 438 petitions for private bills were presented, and 286 private acts were passed. The King, even, was so deceived by the general appearance of things, or was so purposely blind to their real state, as to congratulate the country, in July, 1825, on “the prosperity everywhere pervading the country.” The time arrives when anxious speculators begin to look out for some return for their money; they are told that their capital cannot possibly realize so soon; then the bankers are besieged, but, tempted by the abundance of money, they had discounted bills at long dates to an enormous extent, and lent money upon securities which were presently seen to be almost worthless. Then came the panic,—and then the crash. Commercial houses first failed, big, substantial firms, which were supposed to have the wealth of Crœsus at their back, came down thunderingly. “Many a firm of unimpeachable honour and unquestionable solvency was compelled to bend before the storm.” Then came the turn of the great banks: they had advanced their money to the merchants, and now that the security had failed, they also must bend before the blast. On the 5th of December, the news spread with the wings of the wind, that the banking house of Sir Peter Cole and Co. had failed; next day, Williams and Co. stopped payment; and from that time, without intermission, seventy country banks went down within six weeks.[53] How things were restored to their original condition, and how promptly the Government acted during the terrible panic, we need not stay to tell. Savings Bank deposits fell from about three millions in 1825, to less than half that sum in 1826. More money was withdrawn in the year of the panic than had been withdrawn altogether since the year 1820. It is not a little curious, as showing that depositors in Savings Banks are less inclined to speculation than other classes, to point out, that during the panic a sum equal to at least fourteen millions sterling must have been safely lodged in the different provident banks of the country; and that little money was hazarded in the speculations of the time is evident from the fact that only one-tenth part of the whole amount of deposits was withdrawn to supply emergencies. In this way were those people rewarded who preferred a safe deposit with a reasonable interest to “cent. per cent.” and unlimited risk.
Nor can we stop to describe the result of the panic on the industrial classes. The picture of that terrible time has often been drawn, when thousands of hungry, infuriated men, roused by the sorest distresses, went about robbing shops, breaking machinery, rick-burning, chased by the constabulary, and fired upon by the soldiery. The time was a most disastrous one, but it was full of lessons for all classes. Many of the provident poor suffered little, and never had anything to fear, on account of having prepared themselves for such calamities. Those of the poor who acted less wisely, and ventured their little surplus in some speculation or other, met with few condolences. When a portion of them petitioned the House of Commons for relief, they were rather roughly told that they ought to have deposited their earnings in Savings Banks. It was on this occasion that Sir Robert Peel replied to this taunting, and recognised the imperfections of the existing machinery, by asking, indignantly, how the House could expect this to be done in cases where “the Savings Bank was perhaps twenty miles from the working man's home.”