A History of Banks for Savings in Great Britain and Ireland

by William Lewins

Mr. Gladstone, thwarted in all his attempts, except in the last insignificant case, to bring about a better state of things in connexion with the management of Savings Banks, determined upon another course of action altogether. He, and other statesmen who had preceded him in his office, had tried their best to improve the existing banks, but they had been persistently hindered and obstructed by the force which Savings Bank officials could bring to bear. For some time now Mr. Gladstone must have had under his eye several proposals which went to the very root of the matter upon which so many difficulties had from time to time arisen, and which promised a thorough and substantial reform. He bent his great energies in this direction; saw his way, not only out of a dilemma, but to the origination of a simpler and more perfect system; and may be said henceforth to have left the friends and partisans of the old Savings Banks to look after their own interests. With the legislation relative to the scheme of Post Office Savings Banks, with which Mr. Gladstone's name will always be prominently associated, we shall deal in a special chapter, and will therefore hasten to describe the remaining steps which the Legislature has taken with regard to Savings Banks proper up to the present time.

Left to themselves, the leading Savings Bank authorities in the House—viz., Mr. Estcourt, Sir H. Willoughby, and Mr. Ayrton—obtained leave, on the 11th of March, 1862, to bring in a bill “to Amend the Laws relating to the Security and Management of Savings Banks.”[110] The points sought by the bill were, briefly, (1) to enforce upon all local banks the regulations of the well-managed ones; (2) to repeal the Act of 1844; (3) to force an auditor upon every bank and define his duties; and, lastly, to provide for the security of the depositors, by enacting that no transactions should take place except at the office, during office hours, and in the presence and with the signature of more than one person. Mr. Estcourt, who briefly explained the drift of the bill, intimated that they were not desirous of altering the relation in which Government stood to Savings Banks, or of interfering in any way as to the disposition of the money. Mr. Gladstone, after stating how completely Government had been baffled in their attempts to alter the law regulating Savings Banks, expressed approval of the bill, though he reserved the right of Government to take any steps they chose at any subsequent stage.[111] On the 20th of May this bill shared the fate of all preceding attempts to place these institutions on a sound basis, by being withdrawn. Savings Bank managers had again interfered, and this time they went against their devoted friends. Mr. Estcourt, on withdrawing the bill, said he had received numerous representations from managers that his measure was “inapplicable” to them; and “only that day an influential body of managers of great experience, and fully to be depended upon,” had waited upon him, requesting him to withdraw it; and if he would consent to this course, they would endeavour to devise some scheme which should meet the requirements of the various establishments. Mr. Estcourt's measure was unquestionably a good one, but it involved too much trouble and risk to trustees: hence its defeat. Mr. Gladstone thought it was high time that those gentlemen should take their turn in devising a scheme. If they proposed a real improvement, Government would make no objection. Referring to the Post Office Banks, Mr. Gladstone said: “Undoubtedly, however, the main question had been disposed of; they were now able to say to the people of England who were disposed to lay by their savings, with a moderate interest and with a perfect security, the Government had provided some 3,000 places where these savings would be received.” Mr. Henley was much discouraged with the difficulties everybody found in the way of legislation. He was “disposed to think that the well-managed banks might go on as usual,” but rather than “tinker” at the others, “the very small banks under the old system, which would not afford the proper machinery for perfect management, ought to be urged to hand over their business to the Post Office Banks.” Mr. D. Griffith “for once agreed with the Chancellor of the Exchequer;” he was glad to hear the Post Office Banks were working so well, and expressed his opinion that “they would ultimately swallow up all the old banks.”[112]

In March, 1863, Mr. Gladstone brought forward once more his propositions relating to the investment of Savings Bank money. He moved—

“That it is expedient to amend the laws relating to the investment of the moneys of Saving Banks, and to create a charge for such Savings Banks upon the Consolidated Fund, in place of certain perpetual annuities now standing in the names of the Commissioners of the National Debt; to give the power for converting certain other amounts of such perpetual annuities into certain other annuities, and to provide for the due payment out of the Consolidated Fund of any deficiency which may arise from insufficiency of the securities to meet the legal claims of the trustees of such Savings Banks.”

After considerable discussion, the bill (26 and 27 Vict. c. 25) was sent up to the Lords under the charge of Lord Stanley of Alderley, and received the Royal Assent on the 8th of June, 1863.

We come now to the last item of legislation on the subject of Savings Banks. On the 14th of April, 1863, Sir H. Willoughby and Mr. Ayrton obtained leave to introduce the bill which, according to promise, had been prepared by a convention of Savings Bank managers. To a great extent this measure “to Consolidate and Amend the Laws relating to Savings Banks,” was identical with the one which Mr. Estcourt introduced and withdrew during the previous session. The managers had met during the recess, and had consolidated into one the eight Acts, or parts of Acts, which then governed their establishments. Mr. Tidd Pratt, on being consulted in the matter, certified that the new Act “would constitute a fair and just measure of improvement.” Mr. Gladstone, too, it seems, had been furnished with a copy, had suggested some trifling emendations, which had been frankly adopted and embodied, and was therefore disposed to offer no captious opposition to it. Not only so, but he thought it creditable to the gentlemen who had it in charge, and, so far as it went, likely to be effectual. Several clauses were altered, struck out, or inserted, and the bill, known as the “Consolidation Act,” received the Royal Assent on the 28th of July, 1863. Of this Act (26 and 27 Vict. c. 87, a full description of which will be found in the Appendix)[113] we shall speak in a subsequent chapter, when we come to consider the law at present regulating Savings Banks.

[69] In a case that arose out of the Carnarvon Bank fraud of 1824, in the Court of Bankruptcy, both the Commissioners, Sir John Cross and Sir George Rose, expressed very strong opinions on the point as against trustees. The former judge, after giving a decision against the trustees in the case, said, “The case could not be made too public,” and he “trusted that it would operate as a warning to the trustees of Savings Banks generally.” Sir George Rose “fully concurred” in the observations of his colleague. He thought “it should be borne in mind that deposits were made by parties, not on the faith of the persons acting as actuary or cashier, but upon the faith of the gentlemen who acted as trustees; where such persons neglected the duties which were incumbent upon them, their conduct was deeply deserving of censure. If, therefore, the clerk, or other person employed by them, were guilty of peculation, they were themselves liable for any defalcation that might ensue.”

[70] Speaking of Mr. Goulburn, when he first took office, a contemporary said, “He possesses that degree of talent which renders him highly respectable without exciting any invidious feeling. He is content to be useful without aspiring to the reputation of an innovator; and, if he shall introduce nothing new, he will at least abstain from anything that is dangerous.” Mr. Goulburn's legislation for Savings Banks scarcely bears out this estimate.

[71] This arrangement, which was quietly dropped before the bill became law, owing to the pressure which managers of Savings Banks brought to bear upon the House, was strongly urged by Mr. Tidd Pratt. That gentleman and Mr. Higham, Comptroller of the National Debt Office, prepared this bill. In the Committee of 1848, Mr. Pratt gave it as his opinion (140), that no depositor should be allowed to put in more than 10l. in one year, instead of 30l., or it might go to 15l.; “but I am quite sure that this latter sum is as much as the small savings of the industrious classes can amount to.” He also proposed to limit the total amount to 100l.

[72] In this same Committee, Mr. Pratt stated that in the course of his investigations in Ireland he had found one man who had had seventeen books out of one Savings Bank, and money to the extent of 520l. lodged there, altogether his own property, but which he represented himself as holding in trust.